Quigley inc. is considering two financial plans for the coming year. management expects sales to be $500 comma 000, operating costs to be $455 comma 000, assets to be $400 comma 000, and its tax rate to be 40%. under plan a, quigley’s balance sheet would be comprised of 25% debt and 75% equity, and the interest rate on the debt would be 3%. under plan b, quigley's balance sheet would be comprised of 60% debt and 40% equity, and the interest rate on the debt would be 8%. sales, operating costs, assets, and the tax rate are not affected by amount of debt quigley uses. ignore non-debt liabilities such as accounts payable. compute roe under each alternative. under plan a, roe = nothing% (enter as percent rounded to 2 digits) under plan b, roe = nothing% (enter as percent rounded to 2 digits)

Return on Equity

Plan A = 8.4%

Plan B = 9.68%

Explanation:

Provided information, we have

Sales = $500,000

Operating Cost = $455,000

Thus Profit before interest and taxes = $500,000 - $455,000 = $45,000

Total value of assets = $400,000

Under Plan A

Debt = 25% and Equity = 75%

Thus, debt = $400,000 25% = $100,000

Interest rate on debt = 3% = $100,000 3% = $3,000

Thus Income after interest but before taxes = $45,000 - $3,000 = $42,000

Less: Taxes @ 40% = ($16,800)

Income after taxes for equity = $25,200

Return on equity =

Under Plan B

Debt = 60% and equity = 40%

Thus, debt = $400,000 60% = $240,000

Interest on debt = $240,000 8% = $19,200

Thus profit after interest = $45,000 - $19,200 = $25,800

Less: Taxes @ 40% = $10,320

Profit for equity = $15,480

Return on equity =

Return on Equity

Plan A = 8.4%

Plan B = 9.68%

first one

explanation:

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

                                          hope it