FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The return on equity is_.
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- Give correct roearrow_forwardWhat is the cost of equity for a firm where the required return on assets is 15.71%, the cost of debt is 6.92%, and the target debt/equity ratio is 1.19? Ignore taxes. O A) 19.05%arrow_forward9. The Merriam Company has determined that its return on equity is 15 percent. Management is interested in the various components that went into this calculation. You are given the following information: total 0.35 and total assets turnover = 2.8. What is the profit margin? debt/total assets = a. b. C. d. e. 3.48% 5.42% 6.96% 2.45% 12.82% 'c qurrent assets?arrow_forward
- What is the return on equity?arrow_forwardA firm has a debt-equity ratio of .52, a pretax cost of debt of 6.5 percent, and a required return on assets of 12 percent. Ignoring taxes, what is the cost of equity? Multiple Choice 12.86 percent 14.36 percent 14.86 percent 20.36 percent 12.00 percentarrow_forwardA firm has a debt-to-equity ratio of 1.20. If it had no debt, its cost of equity would be 15%. Its cost of debt is 10%. What is its cost of equity if there are no taxes or other imperfections? A. 10% B. 15% C. 18% D. 21% E. None of these.arrow_forward
- A firm had a debt ratio of 1.20. The pretax cost of debt is 8% and the reqiured return on asset is 13%. What is the cost of equity if you Ignore taxes? A) 18.24% B) 20.14% C)17.67% D) 19.57% E) 19%arrow_forward12 Gates Appliances has a return-on-assets (investment) ratio of 20 percent. a. If the debt-to-total-assets ratio is 25 percent, what is the return on equity? (Input your answer as a percent rounded to 2 decimal places.) Return on equity % b. If the firm had no debt, what would the return-on-equity ratio be? (Input your answer as a percent rounded to 2 decimal places.) Return on equityarrow_forwardA firm has a debt to equity ratio of 40%, debt of $600,000, and net income of $100,000. What is the return on equity?arrow_forward
- a company debt/ total assesses ratio of 25% and b company 20% with return on total assets of 10% and 7% respectively, which firm has a greater return on equity?? could find it for me?arrow_forwardNeed answerarrow_forwardYou have the following information on a company on which to base your calculations and discussion: Cost of equity capital (rE) = 18.55% Cost of debt (rD) = 7.85% Expected market premium (rM –rF) = 8.35% Risk-free rate (rF) = 5.95% Inflation = 0% Corporate tax rate (TC) = 35% Current long-term and target debt-equity ratio (D:E) = 2:5 a. What are the equity beta (bE) and debt beta (bD) of the firm described above?[Hint: Assume that the above costs of capital have been generated by an appropriate equilibrium model.] b. What is the weighted-average cost of capital (WACC) for this firm at the current debt-equity ratio? c. What would the company’s cost of equity capital become if you unlevered the capital structure (i.e. reduced gearing until there is no debt)arrow_forward
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