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A tech company has a profit margin of 18% on sales of $25,000,000. The firm has total assets of $30,000,000 and total debt of $10,000,000. The after-tax interest cost on total debt is 6%. What is the firm's Return on Assets (ROA)? A) 14.50% B) 15.00% C) 13.75% D) 12.50%

A tech company has a profit margin of 18% on sales of $25,000,000. The firm has total assets of $30,000,000 and total debt of $10,000,000. The after-tax interest cost on total debt is 6%. What is the firm's Return on Assets (ROA)? A) 14.50% B) 15.00% C) 13.75% D) 12.50%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter13: Capital Structure Concepts
Section: Chapter Questions
Problem 6P
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A tech company has a profit margin of 18% on sales of $25,000,000. The firm has total assets of $30,000,000 and total debt of $10,000,000. The after-tax interest cost on total debt is 6%. What is the firm's Return on Assets (ROA)? A) 14.50% B) 15.00% C) 13.75% D) 12.50%
Transcribed Image Text:A tech company has a profit margin of 18% on sales of $25,000,000. The firm has total assets of $30,000,000 and total debt of $10,000,000. The after-tax interest cost on total debt is 6%. What is the firm's Return on Assets (ROA)? A) 14.50% B) 15.00% C) 13.75% D) 12.50%
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