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Myrtle Propane is considering a project that will require $700,000 in assets. Determine the ROE if the project is financed with 100% equity and if they decide to finance it with 50% equity and 50% debt (cost of debt is 10%). The firm has a tax rate of 30% and the project is expected to produce an EBIT of $160,000.

a) 13.6%; 20.0% b) 17.6%; 28.8% c) 16.0%; 25.0% d) 16.8%; 17.5%

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92346400

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