Determine what will be the companys return on equity

Assignment Help Financial Econometrics
Reference no: EM13329567

Midwest Packaging's ROE last year was only 3%; 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 $235,000. The firm has no plans to use preferred stock. Management projects an EBIT of $400,000 on sales of $5,000,000, and it expects to have a total assets turnover ratio of 2.9. Under these conditions, the tax rate will be 30%. If the changes are made, what will be the company's return on equity?

Reference no: EM13329567

Questions Cloud

How many shares of stock will outdoor living need to sell : The underwriters estimate that the firm could sell additional shares of stock at $14.50 a share with a 7.5 percent underwriting spread. This would be a firm commitment underwriting.
Find what is the difference in the total profits or losses : At the end of the first day of trading, IPO A is selling for $22.70 a share and IPO B is selling for $18.60 a share. What is the difference in the total profits or losses that Scott and Steve have as of the end of the first day of trading
Criticism of a corporation : Criticism of a corporation (Microsoft OR  Rio Tinto OR Coles)This assignment asks you to do a little research to find criticism of a major corporation, and evidence for that criticism.
What is richards total profit or loss on the three ipos : The next three IPOs are each priced at $30 a share and will all start trading on the same day. Richard is allocated 1,000 shares of IPO A, 400 shares of IPO B, and 100 shares of IPO C.
Determine what will be the companys return on equity : Midwest Packaging's ROE last year was only 3%; 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 $235,000.
Traditionally male-dominated professions : • Numerous examples show women succeeding in traditionally male-dominated professions. But if success is defined as actually running a company, a corporation, or even a country, we count 19 female CEO’s running Fortune 500 companies. This sounds soli..
Determine what is the times-interest-earned-tie ratio : Graser Trucking has $20 billion in assets, and its tax rate is 30%. Its basic earning power (BEP) ratio is 13%, and its return on assets (ROA) is 3%. What is its times-interest-earned (TIE) ratio
How does the fed use open marketoperations for an : Assume the Federal Reserve Board is undertaking anexpansionary monetary policy. Explain the detailsof how the expansionary Fed impacts each of the following:
What will be the firms total revenues at each gold price : A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells for $1,592 an ounce, but the price is extremely volatile and could fall as low as $1,512 or rise as high as $1,672 in the next month.

Reviews

Write a Review

Financial Econometrics Questions & Answers

  Compute the duration for bond c and rank the bonds

Compute the duration for bond C, and rank the bonds on the basis of their price volatility. The current rate of interest is 8 percent, so the prices of bonds A and B are $1,000 and $1,268 respectively.

  Determine what will be the value of the house in 7 years

Say that you purchase a house for $150,000 by getting a mortgage for $135,000 and paying a $15,000 down payment. Assume you get a 15-year mortgage with a 6% interest rate.

  How does fdic discourage the bank from taking too much risk

Consider the flow of funds for a publicly traded bank that is a key lender to Carson company. This bank received equity funding from shareholders, which it used to establish its business.

  Determine what was the annual increase in selling price

Assume that in January 2010, the average house price in a particular area was $278,400. In January 2000, the average price was $195,300.

  Determine the size of the m1 money mulitplier

What would happen to the money supply if the reserve requirement increased to 14 percent while noncheckable deposits to checkable deposits fell to 35 percent. Assume the other ratios remain as orgiginally stated.

  Find what value would be assigned the existing roof

A new roof would last 20 years, but would cost $20,000. The house is expected to last forever. Assuming the costs will remain constant and that the interest rate is 5% what value would you assign the existing roof

  What is tax liability in each of the alternative situations

Lacy is a single taxpayer. In 2013, her taxable income is $38,000. What is her tax liability in each of the following alternative situations a. All of her income is salary from her employer.

  What should current rate be on 2-year treasury securities

One-year Treasury bills currently earn 1.40 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 1.60 percent. If the unbiased expectations theory is correct

  Determine what will be the value of the funds at retirement

Perry Edwards is 25 years old. He and his wife Anita have two children, Shane and Lisa, ages 1 and 3 respectively. Perry wants to retire in 40 years and refurbish old cars.

  Determine by how much must reserves be decreased

The Federal Reserve has decided that interest rates need to be increased to maintain low inflation in the economy. To accomplish this goal, the Fed has determined that the money supply needs to be decreased by $188 billion.

  Determine what is the firms debt-equity ratio

Kindle Fire Prevention Corp. has a profit margin of 5.4 percent, total asset turnover of 2.1, and ROE of 19.94 percent. What is this firm's debt-equity ratio

  Determine what is the length of the annuity time period

You are considering an annuity which costs $74,100 today. The annuity pays $6,000 a year. The rate of return is 5 percent. What is the length of the annuity time period

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd