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8-1sol - Good State Bad State Net Operating Income...

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PROBLEM 8-1 Given Assets (Invested Capital) $1,500,000.00 Borrowing rate 9.00% Return on Invested Capital Good state 12.00% Bad state 4.00% Capital Structures Debt/Assets Alternative #1 30.00% Alternative #2 50.00% Solution Return on Assets 12.00% 4.00% Alternative #1 Good State Bad State Net Operating Income $180,000.00 $60,000.00 less: Interest Expense (40,500.00) (40,500.00) Net Income $139,500.00 $19,500.00 Return on Equity 13.29% 1.86% Alternative #2
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Unformatted text preview: Good State Bad State Net Operating Income $180,000.00 $60,000.00 Less: Interest Expense (67,500.00) (67,500.00) Net Income $112,500.00 $(7,500.00) Return on Equity 15.00%-1.00% Solution Legend = Value given in problem = Formula/Calculation/Analysis required = Qualitative analysis or Short answer required = Goal Seek or Solver cell = Crystal Ball Input = Crystal Ball Output...
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