Ans please Osato Chemicals Inc. is considering a project that will require$700,000 in assets. The project will be financed with 100%equity. The company faces a tax rate of 35%. What will be theROE (return on equity) for this project if it produces an EBIT(earnings before interest and taxes) of $150,000?a. 13.9%b. 11.8%c. 15.3%d. 11.8%

1. Calculate Net Income:EBIT = $150,000Taxes = EBIT * Tax Rate Taxes = $150,000 * 0.35Taxes =…

Answered: Osato Chemicals Inc. is considering a…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 8P

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Suppose Alcatel-Lucent has an equity cost of capital of 10%, market capitalization of $10.8 billion, and an enterprise value of $14.4 billion. Suppose Alcatel-Lucent’s debt cost of capital is 6.1% and its marginal tax rate is 35%. The cash flow for the project is as follows, same as was given in the previous question. Year 0 1 2 3 FCF -100 50 100 Calculate FCFE for each year but only answer: What is the Percentage change in FCFE in Year 2 from Year 1? Please give your answer in Percentage up to 2 places of Decimal without giving the % sign.

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