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lorasvet [3.4K]
3 years ago
8

A firm has taxes of $2,000, interest expense of $1,000, EBIT of $7,500, common stock dividends of $1,500, and preferred dividend

s of $1,200. What is the profit margin if sales are $22,000
Business
1 answer:
stealth61 [152]3 years ago
6 0

Answer:

the  profit margin is 15%

Explanation:

The computation of the profit margin is shown below:

= (EBIT - interest - taxes - preferred dividend) ÷ Sales

= ($7,500 - $1,000 - $2,000 - $1,200) ÷ $22,000

= $3,300 ÷ $22,000

= 15%

Hence, the  profit margin is 15%

Basically the above formula should be applied for the same

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Answer and Explanation:

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a) For ROE of the company

As we know that

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0.4 = 1 - (1 ÷ Equity multiplier)

(1 ÷ Equity multiplier) = 0.6

Equity multiplier = 1 ÷ 0.6

= 1.6667

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= $3.50 × 30%

= $1.05  

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= 15% × (1 - 0.30)

= 10.5%

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= D1 ÷ (ke - g)

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