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bioboy12 bioboy12
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A year ago
Incredible Enterprises follows a moderate current asset investment policy, but it is now considering whether to shift to a restricted or perhaps to a relaxed policy. The firm’s annual sales are $3,600,000, its fixed assets turnover is 4.0, its target capital structure calls for 50% debt and 50% equity, its EBIT is $150,000, the interest rate on its debt is 10%, and its tax rate is 40%. Under the restricted policy, total assets turnover will be 2.5, whilst the total assets turnover under a relaxed policy will be 2.2. What is the difference in the projected ROEs under the restricted and relaxed policies?


▸

2.24%



▸

1.50%



▸

1.00%



▸

0.50%

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
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penmcpenmc
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