A firm has an ROE of 4 percent, a debt/equity ratio of 0.4, a tax rate of 35 percent, and pays an interest rate of 5 percent on its debt. What is its operating ROA?
Q: Starset, Incorporated, has a target debt-equity ratio of 0.76. Its WACC is 10.5 percent, and the tax…
A: Pretax cost of debt can be calculated through the WACC equation and debt-equity ratio. Here…
Q: A company finances its operations and growth opportunities, using common equity and debt. The…
A: The WACC is stands for weighted average cost of capital. The weighted average cost of capital is…
Q: None
A: The Operating ROA or Return on Assets pertains to the ratio of operating income to assets. It…
Q: a firm has a target debt-equity ratio of 0.35. Its cost equity is 11 percent and its before tax cost…
A: The WACC of a company refers to the average profits that the company provides to all its…
Q: X company has an unlevered cost of capital of 11%, a cost of debt of 8%, and a tax rte of 35%. What…
A: Debt-to-Equity ratio shows the proportion of debt capital including non-current liabilities and…
Q: Brown Industries has a det percent. There is no corporate tax. e company's cost of equity capital ld…
A: The debt-equity ratio refers to the ratio which evaluates the company's position in terms of its…
Q: A firm has an ROE of 4%, a debt-to-equity ratio of 0.9, and a tax rate of 35% and pays an interest…
A: Variables in the question: ROE=4%Debt-to-equity=0.9Tax rate=35%Interest rate=7%
Q: A firm has outstanding debt with a coupon rate of 7%, ten years maturity, and a price of $1,000.…
A: Cost of debt =Coupon rate*(1-tax rate).
Q: Which one of the following statements is correct? Multiple Choice O O O O O If the total debt ratio…
A: Financial ratios serve as valuable tools for understanding a company's financial position,…
Q: A firm has an ROE of 4 percent, a debt/equity ratio of 0.4, a tax rate of 35 percent, and pays an…
A: D/E = 0.40Let's take Equity = ESo,Debt = 0.40EAsset = 1.4E Net Income = 0.04E Interest = Interest…
Q: need help
A: Step 1: Understand the formula for the given ratios: Return on Equity = Net Income/ Total EquityDebt…
Q: A firm has EBIT of $30 million. It has debt of $100 million and the cost of debt is 7%. Its…
A: The value of unlevered firm can be calculated by using equation below.Unlevered firm value…
Q: What is the value of equity and debt?
A: Step 1: Calculate the Initial Value of the Firm (V_0)In order to ascertain the firm's initial worth,…
Q: Antwerp Co. has a debt-to-equity ratio of 1.4, a corporate tax rate of 30%, pays 4% interest on its…
A: Data given: Debt-to-equity ratio = 1.4 i.e., D/E= 1.4 Working Note #1 D/E= 1.4 1+D/E = 1+1.4…
Q: First National Bank has a debt-to-equity ratio of 3. Its weighted average cost of capital is 12.50%…
A: Cost of CapitalThe cost of capital refers to the expense a company incurs in order to finance its…
Q: A firm has a tax burden of 0.7. a leverage ratio of 1.3, an interest burden of .8, and a…
A: We need to use Du Pont method to calculate ROE. The equation isROE = Tax burden ratio*Interest…
Q: Company A has a ROA of 8% and a ROE of 12 % . Company B has a ROA of 7% and an ROE of 15%. What does…
A: We will find the ratio of equity/total assets, which measures the percentage equity allocation of…
Q: Want answer
A: Step 1: GivenDept ratio = 15 % = 0.15ROE = 13 % = 0.13ROA = ? Step 2: Formula usedDebt ratio = Total…
Q: Harmony Sego has a tax rate of 21%, the interest rate on debt is 10%, and the WACC is 15%. If the…
A: WACC: "Weighted average cost of capital" represents the cost of capital from all of the sources of…
Q: 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…
A: A financial term known as operating return on assets, or ROA, gauges how profitable and efficient an…
Q: Bank ABC has a Return on Equity (ROE) equal to 22%, a total debt ratio (debt/total assets) equal to…
A: Here,Return on Equity (ROE) is 22%Total Debt Ratio is 0.9Asset Utilisation Ratio is 0.05
Q: Butler, Inc., has a target debt-equity ratio of 1.70. Its WACC is 8.8 percent, and the tax rate is…
A: WACC reflects the average rate of return required by both equity and debt investors to finance the…
Q: A firm has an ROE of 4%, a debt/equity ratio of 0.4, a tax rate of 35%, and pays an interest rate of…
A:
Q: what is the firm?s ROA?
A: Return on Assets (ROA) is an important tool used by the business for determining the profitability…
Q: A company has an expected EBIT of $18,000 in perpetuity, a tax rate of 35%, and a debt-to- equity…
A: The unlevered cost of capital is the cost of capital for a company if it had no debt. It represents…
Q: Petra plc. has a current and target leverage ratio of 0.8, the finance cost from loans is 16 per…
A: Weighted cost of capital: It can be defined as the rate that is paid by the company on the average…
Q: Benjamin Manufacturing has a target debt-equity ratio of .45. Its WACC is 11.2%, and its cost of…
A: The cost of equity signifies the expected rate of return a company needs to deliver on its equity…
Q: 4. Company ABC has an equity/debt ratio of 3,2. Its WACC is 9 percent, and its expected rate of…
A: a) Calculate the cost of debt (KD) by the weighted average cost of capital (WACC) by the formula.…
Q: 6. Company A maintains a debt equity ratio of 0.7, where debt is the net debt (i.e. debt minus…
A: Any entity raises funds from multiple sources. Debt and equity are the major funding sources that an…
Q: A firm has a cost of debt of 6.5 percent and a cost of equity of 10.1 percent. The debt–equity ratio…
A: Solution:Weighted Average Cost of Capital (WACC) means the average cost of capital for the firm…
Q: Larry’s Levers, a large manufacturer of crowbars, has a book value debt-to-equity ratio of 0.30…
A: The objective of the question is to calculate the Weighted Average Cost of Capital (WACC) for…
Q: Tomeco Co. has a WACC of 12 percent. Its debt sells at a yield to maturity of 6 percent, and its tax…
A: Equity to total asset ratio is the financial tool to determine the value of asset that the…
Q: Ursala, Incorporated, has a target debt-equity ratio of 1.10. Its WACC is 8.2 percent, and the tax…
A: The objective of the question is to calculate the pretax cost of debt and the cost of equity for…
Q: A firm has a debt-to-equity ratio of 0.50. Its cost of debt is 12%. Its overall cost of capital is…
A: To calculate the cost of equity we will use WACC formula as follows: WACC = [Ke*E]+[Kd*D] Where…
Q: Assume that a company borrows at a cost of 0.08. Its tax rate is 0.35. What is the minimum after-tax…
A: Cost of Capital is the rate that a company is expected to pay on average on all the security holders…
Q: Sewing World has an all-equity cost of capital of 11.72 percent, a levered cost of equity of 12.94…
A: A firm raises finance from various sources typically debt and Equity. The ratio of debt finance to…
Q: ?
A: Given:Debt Ratio = 15% = 0.15ROE = 13% = 0.13To find ROA given debt ratio and ROE we will use the…
Q: 4. North Inc has a perpetual expected EBIT of $200. The interest rate on debt is 12%. Assume that…
A: Value of firm can be determined by the addition of value of unlevered firm and value of debt in the…
Q: Solve this Problem
A: The problem requires the determination of net income. Net income pertains to the amount of…
Q: Find the firm’s Cost of equity, given only the following information about the firm: the firm’s cost…
A: The cost which the firm has to bear for having equity funds in their capital structure is called…
Q: A firm is fully invested in commercial real estate. The commercial real estate it owns experienced a…
A: Debt refers to the funds raised from the outside sources in order to finance the business…
Q: Debbie's Cookies has a return on assets of 8.1 percent and a cost of equity of 12.5 percent. What is…
A: Cost of Equity:The expected rate of return that an investor requires for holding a company's equity.…
Q: A firm has a cost of debt of 6.2 percent and a cost of equity of 13.3 percent. The debt–equity ratio…
A: Cost of debt = 6.2% Cost of equity = 13.3% Debt-equity ratio = 0.96 Debt-asset ratio = Debt equity…
Q: a. Cost of debt b. Cost of equity % %
A: WACC=9.4%Tax rate=25%Debt-Equity Ratio=1.43, therefore if Debt is 1.43 then Equity is1Cost of…
Q: A firm has a debt-equity ratio of 0.5 and a cost of debt of 5 percent. The industry average cost of…
A: Given, Debt equity ratio is 0.5. Cost of debt is 5% Cost of unlevered equity is 15%
Step by step
Solved in 2 steps with 1 images
- A firm has an ROE of 4.4%, a debt-to-equity ratio of 0.7, and a tax rate of 35% and pays an interest rate of 5% on its debt. What is its operating ROA (round to 2 decimal places)? ROA ?%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 firm has a return on assets of 7.8 percent and a cost of equity of 11.9 percent. What is the pretax cost of debt if the debt–equity ratio is .72? Ignore taxes.
- A 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 %Find the WACC given the following information: A firm has a cost of equity of 8% and cost of debt of 6.5%. The debt - toequity ratio is 0.75. The tax rate is 15%.A firm has an ROE of 4%, a debt-to-equity ratio of 0.9, and a tax rate of 35% and pays an interest rate of 7% on its debt. What is its operating ROA? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. ROA %
- A firm had a debt ratio of 0.85. The pretax cost of debt is 8% and the reqiured return on asset is 15.5%. What is the cost of equity if we factorin the firms tax rate of 24%? A) 19.53 B) 18.92 C) 21.57 D) 20.35 E) 20.96Can you help me calculate this ?Gates Appliances has a return-on-assets (investment) ratio of 20 percent. a. If the debt-to-total-assets ratio is 25 percent, what is the return on equity? (Input your answer as a percent rounded to 2 decima) places.) b. If the firm had no debt, what would the return-on-equity ratio be? (Input your answer as a percent rounded to 2 decimal places.)