A firm has a profit margin of 15 percent on sales of $20,000,000. If the firm has debt of $7,500,000, total assets of $22,500,000, and an after-tax interest cost on total debt of 5 percent, what is the firm's ROA? a. 8.4% b. 10.9% c. 12.0% d. 13.3% e. 15.1%
A firm has a profit margin of 15 percent on sales of $20,000,000. If the firm has debt of $7,500,000, total assets of $22,500,000, and an after-tax interest cost on total debt of 5 percent, what is the firm's ROA? a. 8.4% b. 10.9% c. 12.0% d. 13.3% e. 15.1%
Chapter13: Capital Structure Concepts
Section: Chapter Questions
Problem 6P
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Accounting a firm has a profit margin of 15 percent on sales
Transcribed Image Text:A firm has a profit margin of 15 percent on
sales of $20,000,000. If the firm has debt of
$7,500,000, total assets of $22,500,000, and an
after-tax interest cost on total debt of 5 percent,
what is the firm's ROA?
a. 8.4%
b. 10.9%
c. 12.0%
d. 13.3%
e. 15.1%
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