A project requires $500,000 in assets and will be 100% equity financed. If EBIT is $120,000 and the tax rate is 40%, what is the ROE?
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- Need helpWe face two projects. One is to be financed with equity only. Its IRR is 12% and the cost of equity is 14%. The other project will be financed only with debt whose after tax cost is 6.5%. The IRR is 8% of the second project The COC is 10%. Which project should we choose and why?Wizard Co. is considering a project that will require $500,000 in assets. The project will be financed with 100% equity. The company faces a tax rate of 30%. What will be the ROE (return on equity) for this project if it produces an EBIT (earnings before interest and taxes) of $145,000? 20.3% 17.3% 14.2% 16.2% Determine what the project’s ROE will be if its EBIT is –$60,000. When calculating the tax effects, assume that Wizard Co. as a whole will have a large, positive income this year. -9.2% -8.4% -8.8% -7.6% Wizard Co. is also considering financing the project with 50% equity and 50% debt. The interest rate on the company’s debt will be 13%. What will be the project’s ROE if it produces an EBIT of $145,000? 25.2% 36.2% 29.9% 31.5% What will be the project’s ROE if it produces an EBIT of –$60,000 and it finances 50% of the project with equity and 50% with debt? When calculating the…
- The capital structure weights of Kala Ghoda is .55 and the tax rate is 39 percent. The cash flows of Kala Ghoda will be $1.55 million per year for 7 years and the cost of debt is 5.46 percent. What is the NPV if it's equity costs 11.17 percent and the project's cost is $7.5 million?AAA Inc. is evaluating a project that will require $500,000 in assets. The project is financed with equity only and is expected to generate earnings before interest and taxes of $90,000. The firm has a tax rate of 16%. What is the ROE (return on equit for this project? a. 16.00% b. 18.15% O c. 10.75% O d. 15.12%A project that requires an initial investment of $340,000 is expected to have an after-tax cash flow of $70,000 per year for the first two years, $90,000 per year for the next two years, and $150,000 for the fifth year? Assume the required return for this project is 10%. Use formula solve Please!!!a. What is the NPV of the project? b. What is the IRR of the project? c. What is the MIRR of the project? d. What is the PI of the project?
- BadRock Corp is evaluating a project with revenues will be $3.5 million and cash expenses will be $1.5 million while depreciation expense will be $400 000 per year, then what is the expected free cash flow per year from taking the project if the company's tax rate is 30 per cent?None2. A company has an investment project that would cost $10 million today and yield a payoff of $15 million in 4 years. Should the firm undertake the project if the interest rate is 11 percent? 10 percent? 9 percent? 8 percent? Can you figure out the exact cutoff for the interest rate between profitability and nonprofitability?
