VAD Debt/ Capital ratio is oDROE:.Do:Da:DThe Neal Company wants to estionate year'sretum on equity (ROE) under different financial leverageratios. Neal's total capital is $20 million, it currentlyuses only, common equity, it has no future plans to useprefined-stock in its capital structure, and it's federal-plus - state tax rate is. 25% Neal is a small firm withaverage sale of $25 million or less during the past 3 years,So it is excompt from the interest deduction limitation. TheCFO has estimated next year's EBIT for three possibleStates of the world: $4.4 million with a Q.2 probability,$1.7 million with a 0.5 probability, and $800,000 with a0.3 probabilty. Calculate Neal's expected ROE, standarddavlation, and coefficient of variation for each of the followingdebt-to-capital ratios. Rand your answers to two decimal places,32Ꮡ .o%%Debt / Capital ratio is 10% Interest rate is 9%'sROE :10CU:%/0%UMDebt / Capital ratio is 50%, interest rate is 11%wwwROE:oCU:0100/01700DABAZGEL CADebt/ Capital is 60%, interest rate is 14%.ROE: 100: _%CV..Bala23

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0.3 probability. Calculate Neal's expected ROE, standard daration, and coefficient of variation for each of the following debt to capital ratios. Rand your answers to two decimal plays 4 Debt/Capital ratio is 0: ROE: S % CV: %0 Debt / Capital ratio is 10% Interest rate is 9%'s ROE 8: %0 CU: هه Debt / Capital ratio is 50%, interest rate is 11% ROE: 010 0/0 brot

0.3 probability. Calculate Neal's expected ROE, standard daration, and coefficient of variation for each of the following debt to capital ratios. Rand your answers to two decimal plays 4 Debt/Capital ratio is 0: ROE: S % CV: %0 Debt / Capital ratio is 10% Interest rate is 9%'s ROE 8: %0 CU: هه Debt / Capital ratio is 50%, interest rate is 11% ROE: 010 0/0 brot

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 4P

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