Business, 12.10.2021 18:50 issacurlyheadka
Commonwealth Construction (CC) needs $3 million of assets to get started, and it expects to have a basic earning power ratio of 25%. CC will own no securities, all of its income will be operating income. If it so chooses, CC can finance up to 25% of its assets with debt, which will have an 11% interest rate. If it chooses to use debt, the firm will finance using only debt and common equity, so no preferred stock will be used. Assuming a 25% tax rate on taxable income, what is the difference between CC's expected ROE if it finances these assets with 25% debt versus its expected ROE if it finances these assets entirely with common stock? Round your answer to two decimal places.
Answers: 3
Another question on Business
Business, 22.06.2019 10:40
Two assets have the following expected returns and standard deviations when the risk-free rate is 5%: asset a e(ra) = 18.5% σa = 20% asset b e(rb) = 15% σb = 27% an investor with a risk aversion of a = 3 would find that on a risk-return basis. a. only asset a is acceptable b. only asset b is acceptable c. neither asset a nor asset b is acceptable d. both asset a and asset b are acceptable
Answers: 2
Business, 22.06.2019 11:30
When the amount for land is 36,000 and the amount paid for expenses is 10,000, the balance of total asset is
Answers: 2
Business, 22.06.2019 19:30
The owner of firewood to go is considering buying a hydraulic wood splitter which sells for $50,000. he figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. if, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is expected to be 32 cords per day, what would be its efficiency?
Answers: 1
You know the right answer?
Commonwealth Construction (CC) needs $3 million of assets to get started, and it expects to have a b...
Questions
English, 30.05.2020 15:58
Mathematics, 30.05.2020 15:58
Chemistry, 30.05.2020 15:59
Mathematics, 30.05.2020 15:59
Computers and Technology, 30.05.2020 15:59
