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The Effect of Leverage on Firm Earnings A firm needs $100 to start and has the following expectations: Sales $200 Expenses $185 Tax rate 33% of earnings a. What are earnings if the firm owners invest the $100 thus utilizing no financial leverage? Tax and net earnings values should be rounded to 2 decimal places. b. If the firm borrows (utilizes financial leverage) $40 of the $100 at an interest rate of 10%, what are the firm's net earnings? Tax and net earnings values should be rounded to 2 decimal places. c. What is the return on equity when financial leverage is and is not utilized? Why do the returns differ? ROE results should be shown with 2 decimal places. d. If expenses increase to $194, what will be the new return on equity values for each scenario? ROE results should be shown with 2 decimal places. e. Did the returns decline more when financial leverage was or was not utilized? f. How does the use of financial leverage effect a firm's earnings? When is using financial leverage beneficial? When is it disadvantageous?
Computation of the price of the forward contract and position and what are the forward price and the value of the short position in the forward contract
The legal fees were $152,000, printing costs were $56,000, and all the other expenses were $71,000. What is the profit or loss for Deere and Bros.?
mr. davidson plans to buy a new house in october 2013. the sale price of the house is 436000. he plans to pay 20 down
Explain why IT projects (such as Web site development or redesign) are less likely to be delivered on time and within budget than large building construction projects.
Lately, some of City Band's older musicians have been having difficulty climbing the stairs to get up to the bandstand. In addition, there are two disabled musicians who play at all of the Band's rehearsals but are reluctant to play at the con..
Sarah manages a private equity fund that has an expected risk premium of 5% and an expected standard deviation of 10%. Which of the 2 investment options will carry the better sharp value, or in essence, is a better investment over time for Sarah's ..
Discuss how likely technological advances over the next 20 years will change the way businesses manage working capital. Provide specific examples to support your response.
Consider a 8.80 percent coupon bond with five years to maturity and a current price of $956.20. Suppose the yield on the bond suddenly increases by 2 percent.
List two characteristics each of real, intellectual, and personal property. Do owners of real, intellectual, and personal property each have the same rights under the law? List how each type of property is treated under the law. Explain why it is ..
watch the concept review video how firms raise capital video located in the wileyplus assignment week 3 videos
Rose has preferred stock selling for 99 percent of par that pays a 9 percent annual coupon. What would be Rose's component cost of preferred stock?
corsair inc. uses 40000 plastic housing units each year in its production of paper shredders. the cost of placing an
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