Roland & Company has a new management team that has developed an operating plan to improve upon last year's ROE. The new plan would make the debt ratio 55%, which will result in interest charges of $7,000 per year. EBIT is projected to be $25,000 on sales of $270,000, it expects to have a total assets turnover ratio of 3.0, and the average tax rate will be 40%. What does Roland & Company expect its ROE to be? a. 21.82% b. 26.67% c. 44.44% d. 51.25% e. 17.65%

Roland & Company expect its ROE to be 26,67%

Explanation:

In order To calculate Return on Equity we need first ti calculate the following:

First taking Total asset Turnover ratio = Sales / Total Assets = 3.0, putting in values we get  3.0 = 270,000 / Total Assets

Total Assets = 270,000 / 3.0

Total Assets = 90,000

Secondly

Total liabilities / Total Assets = 55%  debt radio, hence 55% = Total liabilities / 90,000

Total liabilities = 55%*90,000

Total liabilities = 49,500

The next step is to calculate the Shareholders equity which is Total Assets - Total liabilities

Sharholders equity = 90,000-49,500 = 40,500

Now we can calculate the net income

Net income = EBIT- Interest - tax

Net Income = 25,000-7000 = 18,000 - (1-40%) = 10,800

Net income = 10,800

Finally, we can calcuate theReturn on Equity = Net Income / shareholders equity

ROE = 10,800 / 40,500

ROE = 26.67%

a recipe serves 8 people, and calls for 5 lbs of apples and 2 cups of flour. you want to prepare it for 24 people. divide 24 by 8 to get 3, and then multiply your ingredients by 3.

so for 24 people, you'll need 15 lbs of apples, and 6 cups of flour.