Business
Business, 02.07.2019 23:30, famouzgal

Last year hamdi corp. had sales of $500,000, operating costs of $450,000, and year-end assets (which is equal to its total invested capital) of $370,000. the debt-to-total-capital ratio was 17%, the interest rate on the debt was 7.5%, and the firm's tax rate was 25%. the new cfo wants to see how the roe would have been affected if the firm had used a 50% debt-to-total-capital ratio. assume that sales, operating costs, total assets, total invested capital, and the tax rate would not be affected, but the interest rate would rise to 8.0%. by how much would the roe change in response to the change in the capital structure? do not round your intermediate calculations. a. 2.46% b. 2.64% c. 3.21% d. 2.08% e. 2.01%

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