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blondinia [14]
2 years ago
14

Hardwig Inc. is considering whether to pursue a restricted or relaxed current asset investment policy. The firm's annual sales a

re expected to total $3,600,000, its fixed assets turnover ratio equals 4.0, and its debt and common equity are each 50% of total assets. EBIT is $150,000, the interest rate on the firm's debt is 10%, and the tax rate is 25%. If the company follows a restricted policy, its total assets turnover will be 2.5. Under a relaxed policy its total assets turnover will be 2.2.
Refer to the data for Hardwig, Inc. What's the difference in the projected ROEs under the restricted and relaxed policies?

a. 1.20%
b. 1.80%
c. 1.50%
d. 2.16%
e. 2.59%
Business
1 answer:
skad [1K]2 years ago
6 0

Answer:

c. 1.50%

Explanation:

The Hardwig, Inc is considering to pursue a relaxed or restricted current asset investment. We need to calculate the ROE for both the situations. The Net income in the both situation will be;

EBIT - Interest expense - Tax expense = Net Income

Restricted situation = $150,000 - 72,000 - 31,200 = $46,800

Relaxed situation = $150,000 - 81,818 - 27,273 = $40,909

ROE = Net income / equity

Relaxed situation = $40,909 / $818,180 = 5.00%

Restricted situation = $46,800 / $720,000 = 6.50%

The difference between both ROE = 1.50%

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3 years ago
Why is it important to file your federal incomes taxes every year?.
Vesna [10]

Answer:

Avoid losing future refunds.

Explanation:

Part or all of any refund is first used to pay any back taxes owed. Safeguard credit. If the IRS files a tax lien against a taxpayer, it could affect credit scores and make it harder to get a loan.

5 0
2 years ago
Trey has two dependents, his daughters, ages 14 and 17, at year-end (2018). Trey files a joint return with his wife.What amount
Ipatiy [6.2K]

Answer:

(a) His AGI is $103,300.

$2,000 since only one of your daughters qualifies for the child tax credit (must be under 17 at year end).

(b) His AGI is $426,200.

$2,000 - (27 x $50) = $2,000 - $1,350 = $650

For 2018, the income threshold to qualify for the child tax credit increased to $400,000, and it starts to fade away up to $440,000. It phases out $50 per each $1,000 of additional AGI.

(c) His AGI is $428,900, and his daughters are ages 10 and 12.

($2,000 x 2 children) - (29 x $50 x 2 children) = $4,000 - $2,900 = $1,100

6 0
3 years ago
the stock market of country A has an expected return of 8 percent, and standard deviation of expected reutrn of 5 percent. The s
valkas [14]

With stocks of 8% for A and 16% for B, The global minimum variance is given as 10.5 percent

<h3>How to solve for the variance</h3>

The expected return of the stock for the country a is given as 0.05

The Weight of this country's stock market WA  = 0.5

The expected return of the stock for the country a is given as 0.16

The Weight of this country's stock market Wb  = 0.5

Expected Return of the portfolio can be calculated as

= (WA x RA) + (WB * RB)

Expected Return of the portfolio = (0.5x 0.05 ) +(0.5*0.16)

= 0.105

= 10.5%

Read more on variance here:  brainly.com/question/10687815

5 0
2 years ago
Which of the following is a capital budgeting technique that converts a project's cash flows using a more consistent reinvestmen
yulyashka [42]

Answer:

c. modified internal rate of return

Explanation:

Modified internal rate of return ( MIRR ) -

The modified internal rate of return is used in order to rank the projects or the investment that are of unequal size.

The assumption involved is that the positive flow of cash are again invested to the firm and the initial outlays are financed during the firm's financing cost , is referred to as the MIRR.

MIRR is very accurate in comparison to the traditional internal rate of return (IRR) and gives the profit and cost of the project with more accuracy.

Hence , from the given information of the question,

The correct option is c. modified internal rate of return .

4 0
3 years ago
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