Answer:
7.4%
Explanation:
As we know that
ROE = Profit margin × Total asset turnover × Equity multiplier
where,
Profit margin = (Net income ÷ Sales) × 100
= ($10,000 ÷ $200,000) × 100
= 5%
So, the ROE would be
= 5% × 1.60 × 1.85
= 14.8%
Now if the net income is increased by $5,000
So, the updated profit margin would be
= (Net income ÷ Sales) × 100
= ($15,000 ÷ $200,000) × 100
= 7.5%
And updated ROE would be
= 7.5% × 1.60 × 1.85
= 22.2%
So, the change in ROE would be
= 22.2% - 14.8%
= 7.4%
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Answer:
The bond price is $1024.74.
Explanation:
Given,
time, t= 8 year
Maturity value, F = $1,000
interest rate, r = 6.1%
Coupon, C = $65
Bond's price = ![C [ \dfrac{(1-[1+r]^{-t} )}{r} ] + \dfrac{F}{[1+r]^t}](https://tex.z-dn.net/?f=C%20%5B%20%5Cdfrac%7B%281-%5B1%2Br%5D%5E%7B-t%7D%20%29%7D%7Br%7D%20%5D%20%2B%20%5Cdfrac%7BF%7D%7B%5B1%2Br%5D%5Et%7D)
= ![65 [ \dfrac{(1-[1+0.061]^{-8})}{0.061}] +\dfrac{1000}{[1+0.061]^8}](https://tex.z-dn.net/?f=65%20%5B%20%5Cdfrac%7B%281-%5B1%2B0.061%5D%5E%7B-8%7D%29%7D%7B0.061%7D%5D%20%2B%5Cdfrac%7B1000%7D%7B%5B1%2B0.061%5D%5E8%7D)
= ![65 [\dfrac{ (1- \dfrac{1}{1.6059})}{0.061}] + \dfrac{1000}{1.6059}](https://tex.z-dn.net/?f=65%20%5B%5Cdfrac%7B%20%281-%20%5Cdfrac%7B1%7D%7B1.6059%7D%29%7D%7B0.061%7D%5D%20%2B%20%5Cdfrac%7B1000%7D%7B1.6059%7D)
= ![65 [ \dfrac{(1 - 0.6227)}{0.061}] +\dfrac{1000}{1.6059}](https://tex.z-dn.net/?f=65%20%5B%20%5Cdfrac%7B%281%20-%200.6227%29%7D%7B0.061%7D%5D%20%2B%5Cdfrac%7B1000%7D%7B1.6059%7D)
=![65\times [ 6.1852] + 622.70](https://tex.z-dn.net/?f=%2065%5Ctimes%20%5B%206.1852%5D%20%2B%20622.70)
=$1024.74.
Hence, the bond price is $1024.74.