Business, 03.05.2020 14:25 floydsidney1119
Firms HL and LL are identical except for their financial leverage ratios and the interest rates they pay on debt. Each has $21 million in invested capital, has $6.3 million of EBIT, and is in the 40% federal-plus-state tax bracket. Firm HL, however, has a debt-to-capital ratio of 60% and pays 11% interest on its debt, whereas LL has a 35% debt-to-capital ratio and pays only 10% interest on its debt. Neither firm uses preferred stock in its capital structure.
Calculate the return on invested capital (ROIC) for each firm. Round your answers to two decimal places.
ROIC for firm LL is %
ROIC for firm HL is %
Calculate the rate of return on equity (ROE) for each firm. Round your answers to two decimal places.
ROE for firm LL is %
ROE for firm HL is %
Observing that HL has a higher ROE, LL's treasurer is thinking of raising the debt-to-capital ratio from 35% to 60% even though that would increase LL's interest rate on all debt to 15%. Calculate the new ROE for LL. Round your answer to two decimal places.
%
Answers: 2
Business, 21.06.2019 16:00
Common problems that can arise among groups. explain in four or five sentences what can cause the specific or general problem. in addition, explain what impact that conflict can have on group cohesion as well as productivity.
Answers: 1
Business, 22.06.2019 11:50
After graduation, you plan to work for dynamo corporation for 12 years and then start your own business. you expect to save and deposit $7,500 a year for the first 6 years (t = 1 through t = 6) and $15,000 annually for the following 6 years (t = 7 through t = 12). the first deposit will be made a year from today. in addition, your grandfather just gave you a $32,500 graduation gift which you will deposit immediately (t = 0). if the account earns 9% compounded annually, how much will you have when you start your business 12 years from now?
Answers: 1
Business, 22.06.2019 13:30
The fiscal 2016 financial statements of nike inc. shows average net operating assets (noa) of $8,450 million, average net nonoperating obligations (nno) of $(4,033) million, average total liabilities of $9,014 million, and average equity of $12,483 million. the company's 2016 financial leverage (flev) is: select one: a. (0.477) b. (0.559 c. (0.323) d. (0.447) e. there is not enough information to determine the ratio.
Answers: 2
Business, 22.06.2019 15:40
Colter steel has $5,550,000 in assets. temporary current assets $ 3,100,000 permanent current assets 1,605,000 fixed assets 845,000 total assets $ 5,550,000 assume the term structure of interest rates becomes inverted, with short-term rates going to 10 percent and long-term rates 2 percentage points lower than short-term rates. earnings before interest and taxes are $1,170,000. the tax rate is 40 percent earnings after taxes = ?
Answers: 1
Firms HL and LL are identical except for their financial leverage ratios and the interest rates they...
Computers and Technology, 15.10.2020 08:01
Social Studies, 15.10.2020 08:01
Biology, 15.10.2020 08:01
History, 15.10.2020 08:01
History, 15.10.2020 08:01
English, 15.10.2020 08:01
Computers and Technology, 15.10.2020 08:01
Computers and Technology, 15.10.2020 08:01