A firm has an ROE of 4 percent, a debt/equity ratio of 0.4, a tax rate of 35 percent, and pays an interest rate of 5 percent on its debt. What is its operating ROA?
A firm has an ROE of 4 percent, a debt/equity ratio of 0.4, a tax rate of 35 percent, and pays an interest rate of 5 percent on its debt. What is its operating ROA?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A firm has an ROE of 4 percent, a debt/equity ratio of
0.4, a tax rate of 35 percent, and pays an interest rate
of 5 percent on its debt. What is its operating ROA?
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