A firm has a tax burden ratio of 0.8, a leverage ratio of 1.65, an interest burden of 0.5, and a return on sales of 16%. The firm generates $2.30 in sales per dollar of assets. What is the firm's ROE? (Do not round intermediate calculations. Omit the "%" sign in your response. Round your answer to 2 decimal places.)
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- A firm has an ROE of 2%, a debt/equity ratio of 0.6, a tax rate of 30%, and pays an interest rate of 7% on its debt. What is its operating ROA? (Do not round intermediate calculations. Round your answer to 2 decimal places.) ROA %A company hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $2.45; P0 = $28.96; and g = 4.06% (constant). What is the cost of equity from retained earnings? Do not round your intermediate calculations. Express your answer as a percent rounded to two decimal places. (For example, 4.567% should be entered as 4.57)A firm has an ROE of 2%, a debt/equity ratio of 0.4, and a tax rate of 40%, and pays an interest rate of 7% on its debt. What is its operating ROA? (Do not round intermediate calculations. Round your answer to 2 decimal places.).
- A company hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $2.45; P0 = $28.96; and g = 4.06% (constant). What is the cost of equity from retained earnings? Do not round your intermediate calculations. Express your answer as a percent rounded to two decimal places.Give typing answer with explanation and conclusion _____ 2.) A company has a tax burden ratio of 0.4, a compound leverage factor of 0.6, a return on sales of 0.9, a leverage ratio of 0.7, and an asset turnover of 0.3. What is the ROE for the company? A.) 2.90% B.) 4.54% C.) 6.48% D.) 11.4% E.) None of the aboveA firm has an ROE of 4%, a debt/equity ratio of 0.4, a tax rate of 35%, and pays an interest rate of 5% on its debt. What is its operating ROA? (Do not round intermediate calculations.Round your answer to 2 decimal places.) ROA %
- Fujita, Incorporated, has no debt outstanding and a total market value of $450,000. Earnings before interest and taxes, EBIT, are projected to be $57,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 16 percent higher. If there is a recession, then EBIT will be 24 percent lower. The company is considering a $215,000 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 9,000 shares outstanding. Ignore taxes for questions (a) and (b). Assume the company has a market- to-book ratio of 1.0 and the stock price remains constant. a-1. Calculate return on equity (ROE) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in ROE when the economy expands or enters a recession. (A negative answer should be…Problem 16-3 ROE and Leverage [LO1, 2] Fujita, Incorporated, has no debt outstanding and a total market value of $356,900. Earnings before Interest and taxes, EBIT, are projected to be $50,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 16 percent higher. If there is a recession, then EBIT will be 25 percent lower. The company is considering a $180,000 debt Issue with an interest rate of 5 percent. The proceeds will be used to repurchase shares of stock. There are currently 8,300 shares outstanding. Ignore taxes for questions (a) and (b). Assume the company has a market- to-book ratio of 1.0 and the stock price remains constant. a-1. Calculate return on equity (ROE) under each of the three economic scenarios before any debt is issued. (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in ROE when the economy expands or enters a…Assume the firm has a tax rate of 23 percent. c-1. Calculate return on equity (ROE) under each of the three economic scenarios before any debt is Issued. (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-2. Calculate the percentage changes in ROE when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-3. Calculate the return on equity (ROE) under each of the three economic scenarios assuming the firm goes through with the recapitalization. (Do not round Intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-4. Given the recapitalization, calculate the percentage changes in ROE when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round…
- Provide correct answer for this accounting questionA firm has a weighted average cost of capital of 8.4%, a cost of equity is 11%, and a pretax cost of debt of 5.8%. The tax rate is 25%. What is the company's target debt-equity ratio, expressed as a percentage? (Please, do not round your intermediate calculations; rou necessary, your final answer, expressed as a percentage, to two decimal places without the % symbol. Example, if your final answer calcula or X/Y, or X+Y, or X-Y, is 0.124556, enter it as 12.46)You calculate that a firm has a total asset turnover of 0.12 and a profit margin of 0.92. If the firm reports that its ROE for the same time period is equal to 0.26, what must be the firms debt-to-equity ratio? Answer as a decimal (not percentage) to two decimal places.