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andrew11 [14]
3 years ago
10

Edwards Enterprises follows a moderate current asset investment policy, but it is now considering a change, perhaps to a restric

ted or maybe to a relaxed policy. The firm's annual sales are $400,000; its fixed assets are $100,000; its target capital structure calls for 50% debt and 50% equity; its EBIT is $39,000; the interest rate on its debt is 10%; and its tax rate is 40%. With a restricted policy, current assets will be 15% of sales, while under a relaxed policy they will be 25% of sales. What is the difference in the projected ROEs between the restricted and relaxed policies?

Business
1 answer:
VashaNatasha [74]3 years ago
8 0

Answer:

Please see attachment

Explanation:

Please see attachment

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