Unformatted text preview: of the resulting ROE distribution will be 0.0396735 percent (0.0396735% = 0.000396735). Given this information, and using the concept of Zscores, determine the probability that the actual observed ROE will be less than 10.0 percent. A. 5.29% B. 4.55% C. 5.66% D. 4.92% E. 6.03% 47. Assume that a company generates $12,750,000 in sales by selling 2,550,000 units at $5 per unit. The firm has variable costs equal to 75 percent of sales, interest expense of $400,000, and a degree of financial leverage of 2.25. The company estimates that if its sales were to increase 10 percent, its return on equity would increase by 31.5 percent. Based on this information, and assuming that the change in sales will have no effect on the company’s tax rate, total assets, or number of shares outstanding, determine the current amount of the company’s fixed costs. A. $902,585.72 B. $926,971.43 C. $910,714.29 D. $935,100.00...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
 Spring '08
 Staff
 Interest, Leverage

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