What will be the companys return on equity

Assignment Help Financial Management

Reference no: EM13847251

Midwest Packaging's ROE last year was only 6%; but its management has developed a new operating plan that calls for a debt-to-assets ratio of 40%, which will result in annual interest charges of $517,000. The firm has no plans to use preferred stock. Management projects an EBIT of $1,067,000 on sales of $11,000,000, and it expects to have a total assets turnover ratio of 2.4. Under these conditions, the tax rate will be 30%. If the changes are made, what will be the company's return on equity? Round your answer to two decimal places.

Reference no: EM13847251

Questions Cloud

How long will it take to double your money : If you deposit money today in an account that pays 14.5% annual interest, how long will it take to double your money? Round your answer to two decimal place

Finding the required interest rate : Your parents will retire in 25 years. They currently have $300,000, and they think they will need $1,100,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?

Time to reach a financial goal : You have $34,211.54 in a brokerage account, and you plan to deposit an additional $4,000 at the end of every future year until your account totals $270,000. You expect to earn 10% annually on the account. How many years will it take to reach your goa..

Estate taxes on large retirement plan balance : Estate Taxes on Large Retirement Plan Balance: Dr. Norma, Dr. Norma is 68. She has a $10 million IRA, a home worth $2 million and few other assets. She wants to leave all her assets to her three children, and save taxes

What will be the companys return on equity : Midwest Packaging's ROE last year was only 6%; but its management has developed a new operating plan that calls for a debt-to-assets ratio of 40%, which will result in annual interest charges of $517,000. Under these conditions, the tax rate will be ..

Find the after-tax cost of debt-cost of preferred stock : The company can obtain unlimited debt at an interest rate of 10%. The marginal tax rate is 35%. Find the after-tax cost of debt. Preferred stock carries a dividend of $14 and currently sells for $120. Flotation cost on preferred stock is 10 pounds pe..

Discuss the possible challenges faced by sahara : Discuss the possible challenges faced by SAHARA and management's responsibility in overcoming - Competitive advantage is the goal of strategic positioning.

Modified accelerated cost recovery system : The following facts are presented on an opportunity to invest in Machine A: Cost of equipment is $200,000. The machine has an expected 4-year useful life; it will be depreciated according to the 3-year Modified Accelerated Cost Recovery System (MACRS..

Western hydra systems makes panel milling machine : Western Hydra Systems makes a panel milling machine with a 2.7-m-diameter milling head that emits low vibration and processes stress-relieved aluminium panels measuring up to 6000 mm long. The company wants to borrow money for a new production/wareho..

User Account

All Pages