Pacific Packaging'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 40%, which will result in annual interest charges of $360,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of $672,000 on sales of $8,000,000, and it expects to have a total assets turnover ratio of 2.3. Under these conditions, the tax rate will be 25%. If the changes are made, what will be the company's return on equity? Do not round intermediate calculations. Round your answer to two decimal places.

Pacific Packaging'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 40%, which will result in annual interest charges of $360,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of $672,000 on sales of $8,000,000, and it expects to have a total assets turnover ratio of 2.3. Under these conditions, the tax rate will be 25%. If the changes are made, what will be the company's return on equity? Do not round intermediate calculations. Round your answer to two decimal places.

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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Problem Through Pacific Packaging's ROE last year was only 4%, but its management has developed a new operating plant that calls for a debt-to-capital ratio of 45%, which result in annual interest charges of $140,000. The has no plans to use preferred stock and total assets equal total invested capital, Management projects an EBIT of $372,000 on sales of $4,000,000, and it expects to have a total assets turnover ratio of 1.9. Under these conditions, the tax rate will be 25%If the changes are made, what will be the company's return on equity? not round intermediate calculationsRound your answer to two decimal places %
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Your company is worried that it will not be able to fully support the 28% growth in sales that has been forecast. Calculate the $ amount of additional external financing needed if the firm plans to follow a sustainable growth approach. Provide your answer in dollars, without the $. Net income forecast: $300,000 Book Equity: $1,000,000 % of Assets made up by Equity: 40% % of net income paid to shareholders: 5%
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11. Problem 4.14 (Return on Equity) eBook Problem Walk-Through annual Pacific Packaging'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 40%, which will result in interest charges of $200,000. The firm has no plans to use preferred stock, and total assets equal total invested capital. Management projects an EBIT of $352,000 on sales of $4,000,000, and it expects to have a total assets turnover ratio of 2.1. Under these conditions, the tax rate will be 25%. If the changes are made, what will be the company's return on equity? Do not round intermediate calculations. Round your answer to two decimal places.
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