Refer to E13.3. If Tayson issues $200,000 in debt, it anticipates that the interest expense will be
Question:
Refer to E13.3. If Tayson issues $200,000 in debt, it anticipates that the interest expense will be $14,000. However, it expects to use this money and increase sales such that the income before interest and taxes will be $180,000. If Tayson issues the debt what is its planned return on equity?
Data from E13.3
Tayson Company currently has $1,000,000 owners’ equity and no long term debt. Its expected income for 2019 is $120,000 and it is subject to a 20 percent tax rate. What is Tayson’s planned return on equity?
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From E133 we know that Tayson Company currently has 1000000 owners equit...View the full answer
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Related Book For 
Introduction To AccountingAn Integrated Approach
ISBN: 9781119600107
8th Edition
Authors: Penne Ainsworth, Dan Deines
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