Current capital stucture: Assets $15 million Debt $0 Equity $15 million Shares outstanding 600,000 Gond coupon Rate N/A Proposed capital stucture: Assets $15 million Debt $6 million Equity $9 million Shares outstanding 400,000 Bond coupn rate 8%. there are no taxes. EBIT is expected to be 2.5 million, but could be as high as 3.5 million if an economic expansion occurs, or as low as $2 million if a recession occurs. All values are market values. what is ROE for the proposed capital structure if the expected state occurs

Your answer would be is four

Part (a) is relatively straight forward.there are 4 aces in a standard 52-card deck. so the probability that an ace is picked is just 4/52.part (b): note that there are 4 suits in a standard 52-card deck. so picking hearts will be 13/52 or 1/4.part (c): the probability condition or means we need to add the two probabilities because we do not want them simultaneously. so, we end up getting pr(ace) + pr(heart).from part (a), we found that picking an ace had a probability of 4/52, which is reduced down to 1/13.from part (b), we found that picking a heart had a probability of 1/4.so, the probability of an ace or a heart is 1/13 + 1/4 = 4/52 + 13/52 = 17/52.

Answerfloor-ready