The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $17 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4 million with a 0.2 probability, $2.4 million with a 0.5 probability, and $0.8 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.
Debt/Capital ratio is 0.
RÔE = %
σ = %
CV =
Debt/Capital ratio is 10%, interest rate is 9%.
RÔE = %
σ = %
CV =
Debt/Capital ratio is 50%, interest rate is 11%.
RÔE = %
σ = %
CV =
Debt/Capital ratio is 60%, interest rate is 14%.
RÔE = %
σ = %
CV =
Answers: 3
Business, 22.06.2019 04:50
Allie and sarah decided that they want to purchase renters insurance for the apartment they share. they made a list of all of the items to be covered by the insurance policy, along with their estimated values. if the items to be covered total more than $3000, the insurance company charges an annual premium of 23% of the total value of the items. if the items to be covered total $3000 or less, the insurance company charges an annual premium of 20% of the total value of the items.
Answers: 1
Business, 22.06.2019 19:30
Adisadvantage of corporations is that shareholders have to pay on profits.
Answers: 1
Business, 22.06.2019 22:00
The company is experiencing an increase in competition, and at the same time they are building more production facilities in southeast asia. in this scenario, the top management team is most likely to multiple choice increase the cost of their products. restructure to reflect a more bureaucratic, stable organization. pull decision-making responsibility from low-level management, taking it on themselves. give lower-level managers the authority to make decisions to benefit the firm. rid themselves of all buffering product.
Answers: 3
Business, 23.06.2019 09:30
Which part in a cover letter do you write down skills and experience
Answers: 1
The Neal Company wants to estimate next year's return on equity (ROE) under different financial leve...
History, 27.09.2019 05:50
Mathematics, 27.09.2019 05:50
History, 27.09.2019 05:50
Mathematics, 27.09.2019 05:50
Mathematics, 27.09.2019 05:50
Biology, 27.09.2019 05:50
Mathematics, 27.09.2019 05:50
Mathematics, 27.09.2019 05:50
English, 27.09.2019 05:50
Biology, 27.09.2019 05:50
English, 27.09.2019 05:50