QUESTION: 21 A company requires $500,000 in assets and will be 100% equity financed. If the Earnings Before Interest and Taxes (EBIT) is $45,000 and the tax rate is 30%, what is the Return on Equity (ROE)?
QUESTION: 21 A company requires $500,000 in assets and will be 100% equity financed. If the Earnings Before Interest and Taxes (EBIT) is $45,000 and the tax rate is 30%, what is the Return on Equity (ROE)?
Chapter12: The Cost Of Capital
Section: Chapter Questions
Problem 7P
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Transcribed Image Text:QUESTION: 21
A company requires $500,000 in assets and
will be 100% equity financed. If the
Earnings Before Interest and Taxes (EBIT)
is $45,000 and the tax rate is 30%, what is
the Return on Equity (ROE)?
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