What is the proportion of debt financing for a firm

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Reference no: EM13949048

1. What is the proportion of debt financing for a firm that expects a 24% return on equity, a 16% return on assets, and a 12% return on debt? Ignore taxes.

A. 54.0%

B. 60.0%

C. 66.7%

D. 75.0%

2. A firm has perpetual debt of $10 million at an interest rate of 7%. What is the present value of the interest tax shield if the tax rate is 35%?

A. $245,000

B. $700,000

C. $3,500,000

D. $10,000,000

Reference no: EM13949048

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