Question

A firm has an ROE of 4%, a debt/equity ratio of 1.0, a tax rate of...

A firm has an ROE of 4%, a debt/equity ratio of 1.0, a tax rate of 20%, and an interest rate on debt of 5%. What is its operating ROA?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A firm has an ROE of 9%, a debt/equity ratio of 0.3, a tax rate of...
A firm has an ROE of 9%, a debt/equity ratio of 0.3, a tax rate of 30%, and pays an interest rate of 6% on its debt. Firm’s asset turnover is 0.3 -What is firm’s operating ROA? -What is the firm’ Margin - What is the firms Tax burden? - What is the firm’s Leverage factor? - Given ROA that you found, what percentage of its total ROA firm has to pay as interest? - What is the firm’s interest...
A firm has an ROE of 2%, a debt/equity ratio of 0.6, a tax rate of...
A firm has an ROE of 2%, a debt/equity ratio of 0.6, a tax rate of 30%, and pays an interest rate of 7% on its debt. What is its operating ROA? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A firm has an ROE of 6%, a debt/equity ratio of 0.7, a tax rate of...
A firm has an ROE of 6%, a debt/equity ratio of 0.7, a tax rate of 35%, and pays an interest rate of 6% on its debt. What is its operating ROA? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
If a firm has a positive tax rate and a positive operating ROA, and the interest...
If a firm has a positive tax rate and a positive operating ROA, and the interest rate on debt is the same as the operating ROA, then operating ROA will be_______. A. equal to ROE B. less than ROE C. greater than ROE D. greater than zero, but it is impossible to determine how operating ROA will compare to ROE
The equity beta of a firm is 0.8. The firm’s tax rate is 34%. The debt-to-equity...
The equity beta of a firm is 0.8. The firm’s tax rate is 34%. The debt-to-equity ratio is 1.0. What is the firm’s unlevered beta (asset beta)?
A firm has a debt to equity ratio of 2/3. Its cost of equity is 15.2%,...
A firm has a debt to equity ratio of 2/3. Its cost of equity is 15.2%, cost of debt is 4%, and tax rate is 35%. Assume that the risk-free rate is 4%, and market risk premium is 8%. Suppose the firm repurchases stock and finances the repurchase with debt, causing its debt to equity ratio to change to 3/2: What is the firm’s WACC before and after the change in capital structure? Compute the firm’s new equity beta and...
A company currently has the debt-to-equity ratio of 1/3. Its cost of debt is 4% before...
A company currently has the debt-to-equity ratio of 1/3. Its cost of debt is 4% before tax and its cost of equity is 12%. Assume that the company is considering raising the debt-to-equity ratio to 1/2. The tax rate is 20%. What is its new cost of equity under the new debt-to-equity ratio? What is its new weighted average cost of capital (WACC) under the new debt-to-equity ratio.
Summit Builders has a market​ debt-equity ratio of 1.70​, a corporate tax rate of 40 %​,...
Summit Builders has a market​ debt-equity ratio of 1.70​, a corporate tax rate of 40 %​, and pays 8 % interest on its debt. By what amount does the interest tax shield from its debt lower​ Summit's WACC?
Your firm has a debt-equity ratio of .75. The interest rate on the debt is 8.5%...
Your firm has a debt-equity ratio of .75. The interest rate on the debt is 8.5% and the unlevered cost of equity is 15%. What is the cost of equity if there are no taxes? 11.25% 19.88% 21.38%
Summit Builders has a market​ debt-equity ratio of 0.650.65 and a corporate tax rate of 35...
Summit Builders has a market​ debt-equity ratio of 0.650.65 and a corporate tax rate of 35 %35%​, and it pays 7 %7% interest on its debt. The interest tax shield from its debt lowers​ Summit's WACC by what​ amount?