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papahomer papahomer
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7 years ago
Zybeck Corp. projects operating income of $4 million next year. The firm's income tax rate is 40%. Zybeck presently has 750,000 shares of common stock which have a market value of $10 per share, no preferred stock, and no debt. The firm is considering two alternatives to finance a new product: (a) the issuance of $6 million of 10% bonds, or (b) the issuance of 60,000 new shares of common stock at $10 per share. If Zybeck issues common stock this year, what will the firm's return on equity be next year?
A) 16.7%
B) 18.2%
C) 22.1%
D) 26.4%
E) 29.6%
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Financial Management: Principles and Applications

Financial Management: Principles and Applications


Edition: 13th
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vanrheevanrhee
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papahomer Author
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7 years ago
Smart ... Thanks!
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This calls for a celebration Person Raising Both Hands in Celebration
nadiia
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I appreciate what you did here, answered it right Smiling Face with Open Mouth
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