Calculate the return on invested capital roic for firm ll., Ask an Expert

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Firms HL and LL are identical except for their leverage ratios and the interest rates they pay on debt. Each has $15 million in invested capital, has $3 million of EBIT, and is in the 40% federal-plus-state tax bracket. Firm HL, however, has a debt-to-capital ratio of 60% and pays 12% interest on its debt, whereas LL has a 30% debt-to-capital ratio and pays only 8% interest on its debt. Neither firm uses preferred stock in its capital structure.

find out the return on invested capital (ROIC) for firm LL. Round your answers to two decimal places.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M946352

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