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Midwest Packaging's ROE




Question;Midwest Packaging's ROE;last year was only 2%, but its management has developed a new operating plan;that calls for a debt-to-assets ratio of 50%, which will result in annual;interest charges of $225,000. The firm has no plans to use preferred stock.;Management projects an EBIT of $450,000 on sales of $5,000,000, and it expects;to have a total assets turnover ratio of 2.5. Under these conditions, the tax;rate will be 30%. If the changes are made, what will be the company's return on;equity?


Paper#37553 | Written in 18-Jul-2015

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