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pompa pompa
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7 years ago
Zheng Sen's Chinese Take-Out had earnings before interest and taxes of $4,000,000 last year. The firm has a marginal tax rate of 40 percent and currently has the following capital structure:



(a)   Calculate the firm's after-tax return on equity (ROE) and earnings per share (EPS).
(b)   If the firm retires $4,000,000 of preferred stock using the proceeds from an equal increase in long-term debt, what would have been the after-tax return on equity (ROE) and earnings per share (EPS)?
(c)   If the firm retires $4,000,000 of preferred stock using the proceeds from the sale of 500,000 shares of common stock, what would have been the after-tax return on equity (ROE) and earnings per share (EPS)?
Textbook 
Principles of Managerial Finance

Principles of Managerial Finance


Edition: 14th
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UlainUlain
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