Answer:
c. Erie s ROE will remain the same
Explanation:
As the return on asset is calcualte using the asset figure it will not change with a financial leverage measurement.
As the financial leverage acts in the composition of other side of the accounting (assets = liabilitis + equity) it will change the return on equity, the debt ratio and other metric related to this side but, not the return on assets.
After answering objections
So C.
Answer:
$2,216.28 million
Explanation:
JJ MoneyTree Inc firm's total corporate value shall be determined through the following mentioned formula:
Total Corporate value= [(Free Cash Flow(1+g))/(WACC-g)]
In the given question:
Free Cash Flow=$156 million
g=constant growth rate=3%
WACC=10.25%
Total Corporate value= [(156(1+3%))/(10.25%-3%)]
=$2,216.28 million
One example is “engagement” consider to be “business activities”
