For this and the next 2 questions: A firm has total assets of $15.4 million and a debt/equity ratio of 0.825. The firm's sales are $11 million, and it has total fixed costs of $4.4 million. Suppose also the firm's EBIT is $2.2 million, its tax rate is 45%, and the interest rate on all of its debt is 10%. How much debt does the firm have on its balance sheet? 1) $8.43836 million 2) $6.96164 million 3) $4.4825 million 4) Not enough information Question 12 Calculate the firm's equity multiplier ratio 1) 0.54795 2) 0.22727 3) 1.825
For this and the next 2 questions: A firm has total assets of $15.4 million and a debt/equity ratio of 0.825. The firm's sales are $11 million, and it has total fixed costs of $4.4 million. Suppose also the firm's EBIT is $2.2 million, its tax rate is 45%, and the interest rate on all of its debt is 10%. How much debt does the firm have on its balance sheet? 1) $8.43836 million 2) $6.96164 million 3) $4.4825 million 4) Not enough information Question 12 Calculate the firm's equity multiplier ratio 1) 0.54795 2) 0.22727 3) 1.825
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Question 11
For this and the next 2 questions: A firm has total assets of $15.4 million and a
debt/equity ratio of 0.825. The firm's sales are $11 million, and it has total fixed
costs of $4.4 million. Suppose also the firm's EBIT is $2.2 million, its tax rate is 45%,
and the interest rate on all of its debt is 10%. How much debt does the firm have on
its balance sheet?
1) $8.43836 million
2) $6.96164 million
3) $4.4825 million
4) Not enough information
Question 12
Calculate the firm's equity multiplier ratio
1) 0.54795
2) 0.22727
3) 1.825
4) None of the above](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa5470c16-a091-4a24-bc57-d8f57d2f978b%2F956dce12-354e-4279-adc0-8bf0e7530fb5%2Fy27mpx_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 11
For this and the next 2 questions: A firm has total assets of $15.4 million and a
debt/equity ratio of 0.825. The firm's sales are $11 million, and it has total fixed
costs of $4.4 million. Suppose also the firm's EBIT is $2.2 million, its tax rate is 45%,
and the interest rate on all of its debt is 10%. How much debt does the firm have on
its balance sheet?
1) $8.43836 million
2) $6.96164 million
3) $4.4825 million
4) Not enough information
Question 12
Calculate the firm's equity multiplier ratio
1) 0.54795
2) 0.22727
3) 1.825
4) None of the above
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