expert of general accounting answer The project requires $700,000 in assets and will be100% equity financed. If EBIT is $145,000 and thetax rate is 35%, what is ROE?

Step 1: Definition of Return on Equity (ROE)Return on Equity (ROE) is a financial ratio that…

Answered: The project requires $700,000 in assets…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

What is ROE ?
You are considering a project that will cost $50,000 to set up, and will pay out $18,000 1,2,3 and 4 years from today. The unlevered beta for this project is 1.2, the risk free rate is 6.5%, and the expected return on the S&P 500 is 15%. Corporate taxes are 25%. a. What is the unlevered cost of equity for this project? b. What is the NPV of this project if you finance with all equity? c. You are considering borrowing $30,000 to finance this project, with repayment in 4 years. You could normally borrow at 7.5%. The Nebraska state government has offered to lend you the money at 6%. What is the adjusted present value of this project if you take the subsidized loan?
You are planning to issue debt to finance a new project. The project will require $20.86 million in financing and you estimate its NPV to be $15.199 million. The issue costs for the debt will be 2.7% of face value. Taking into account the costs of external financing, what is the NPV of the project? The new NPV will be $ __ ? (Round to the nearest dollar.)
XYZ is considering a 3-yr project. The initial outlay is -$120,000, annual cash flow is $50,000 and the terminal cash flow is $10,000. The required rate of return (cost of capital) is 15%. The net present value is $736.42. What if the required rate of return is 13% instead? Re-calculate the NPV.
XYZ is considering a 3-yr project. The initial outlay is -$120,000, annual cash flow is $50,000 and the terminal cash flow is $10,000. The required rate of return (cost of capital) is 15%. The net present value is $736.42. What if the annual cash flow increases to $51,000 instead? Re-calculate the NPV.
We face two projects. One is to be financed with equity only. Its IRR is 12% and the cost of equity is 14%. The other project will be financed only with debt whose after tax cost is 6.5%. The IRR is 8% of the second project The COC is 10%. Which project should we choose and why?
A project that costs $50 million is expected to generate $20 million per year over the next 4 years. The project's cost of capital is 6%. a) Find the payback period (PP).b) Find the net present value (NPV).c) Find the internal rate of return (IRR).d) Find the modified internal rate of return (MIRR).
Suppose there are two potential projects for investment. Project 1 has a certain payoff of $50 in one year, while project 2 has a 50% chance of generating $100 in one year, and another 50% chance of generating $0 in one year. Suppose the company has an outstanding debt = $50. (1)Which project will shareholders prefer? Justify your answer. (2)Which project will debt holders prefer? Justify your answer. (3)Which project will the financial manager prefer? Justify your answer.
c) Find the IRR and MIRR of the following project and make your decision. Assume that the project's cost of capital (or WACC) is 4%.Project X that costs $30 million is expected to generate $13m per year for 3 years. Is this project acceptable?
9. You are considering investing in a start-up project at a cost of $100,000. You expect the project to return $500,000 to you in seven years. Given the risk of this project, your cost of capital is 20%. The IRR for this project is closest to: A) 15.60%. B) 18.95%. C) 20.00%. D) 25.85%.
Suppose you're presented with a proposal for a project that costs $4,300 and will bring in $20,200 the first year. The next year, you'll have to pay out $15,600.With a cost of capital of 14 %, calculate the net present value (NPV) for this project. The NPV of the project is? (Round to the nearest cent.)
A project that requires an initial investment of $340,000 is expected to have an after-tax cash flow of $70,000 per year for the first two years, $90,000 per year for the next two years, and $150,000 for the fifth year? Assume the required return for this project is 10%. Use formula solve Please!!!a. What is the NPV of the project? b. What is the IRR of the project? c. What is the MIRR of the project? d. What is the PI of the project?

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

The project requires $700,000 in assets and will be 100% equity financed. If EBIT is $145,000 and the tax rate is 35%, what is ROE?