Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

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.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M946352

Have any Question? 


Related Questions in Basic Finance

A borrower is making a choice between a mortgage with

A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The loan will be $200,000 at 6 percent interest for 20 years. a. How would you analyze these alternatives? b. What if the biwee ...

If a companys dividends are expected to decline is it

If a company's dividends are expected to decline, is it possible to still use the constant growth dividend discount model? What is the relation between the expected return on a stock and the stock's dividend yield? Conce ...

1 since the 1960s which measure of the money supply has

1. Since the 1960s, which measure of the money supply has grown more rapidly, M1 or M2? Briefly explain why this is the case. Has the growth of M1 been more or less stable than the growth rate of M2? 2. Define liquidity. ...

A company exports 37000 products to chile nbspunder an

A company exports 37,000 products to Chile  under an import license that expires in five years. In Chile, the products are sold for the Chile peso equivalent of $45. Direct shipping costs in the United States and indirec ...

1 based on the cash flow statement and personal balance

1. Based on the cash flow statement and personal balance sheet, do the Sampsons have adequate liquidity to cover their recurring cash flows and planned monthly savings in the long-run? If not, what level of savings shoul ...

To analyze various retirement-planning options check out

To analyze various retirement-planning options, check out the financial calculator at Bloomberg (http://www.bloomberg.com). Determine the effect of waiting versus immediate planning for retirement. What is the effect of ...

A project has an initial cash outflow of 39800 and produces

A project has an initial cash outflow of $39,800 and produces cash inflows of $18,304, $19,516, and $14,280 for years 1 through 3, respectively. What is the NPV at a discount rate of 11 percent?

1 what is liquidity risk how do banks manage liquidity

1. What is liquidity risk? How do banks manage liquidity risk? 2. What is credit risk? How do banks manage credit risk? 3. What is interest-rate risk? How do banks manage interest-rate risk? 4. What is the difference bet ...

Finance helpdescribe how to maximize the value of each

Finance help Describe how to maximize the value of each purchase by utilizing a cost-benefit analysis to make rational decisions about corporate spending, financing projects, or investments. Would you consider cost-benef ...

Why is the capms assumption that investors can borrow and

Why is the CAPM's assumption that investors can borrow and lend at the risk-free rate questionable? What is meant by the "homogeneous assumption" in the CAPM? What is meant by the law of one price, and what does it imply ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen