FIN3300F24's ROE last year was only 5%, but its management has developed a new operating plan that calls for a debt-to-capital ratio of 60%, which will result in net income of $240,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects sales of $5,000,000 and it expects to have a total assets turnover ratio of 1.5. If the changes are made, what will be the company's return of equity (ROE)? 10.80% 18% 20.50% 12%

FIN3300F24's ROE last year was only 5%, but its management has developed a new operating plan that calls for a debt-to-capital ratio of 60%, which will result in net income of $240,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects sales of $5,000,000 and it expects to have a total assets turnover ratio of 1.5. If the changes are made, what will be the company's return of equity (ROE)? 10.80% 18% 20.50% 12%

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 13P

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What will be its return on equity??
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