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Midwest Packaging's ROE last year was only 4%, but...

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Question

Midwest Packaging's ROE last year was only 4%, but its management has developed a new operating plan that calls for a total debt ratio of 55%, which will result in annual interest charges of $396,000. Management projects an EBIT of $1,296,000 on sales of $12,000,000, and it expects to have a total assets turnover ratio of 2.3. Under these conditions, the tax rate will be 40%. If the changes are made, what will be its return on equity? Round your answer to two decimal places.,This answer is being marked as incorrect.

 

Paper#10088 | Written in 18-Jul-2015

Price : $25
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