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Company U has no debt outstanding and the market value is € 1392316. Earnings before interest...

Company U has no debt outstanding and the market value is € 1392316. Earnings before interest and taxes (EBIT) are expected to be € 478603. Assume no taxes and no bankruptcy costs.

Calculate return on equity (ROE). Express your answer as percent

Company U is considering a € 676534 debt issue with a 4% interest rate (the proceeds are used to buy back the shares).

What will be the new equity?

What will ROE be after the debt issue? Express your answer as percent.

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