Swift Foot Couriers has the following financial information: Debt: ......................... $0 Book Equity: .............. $ 1,000,000 Tax
Question:
Debt: ......................... $0
Book Equity: .............. $ 1,000,000
Tax Rate: .................. 30%
EBIT: ....................... 5200,000
Swift Foot decides to borrow $500,000 at an 8% interest rate and, with the proceeds, buy back $500,000 of equity. Calculate return on equity before and after the loan and buy-back is made?
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ROE before 2000001030 1000000 ...View the full answer
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Gaurav Soni
Teaching was always an area where I can pursue my passion. I used to teach my friends and junior during my school and college life. After completing my professional qualification (chartered accountancy) and before joining my job, I also joined an organization for teaching and guidance to my juniors. I had also written some articles during my internship which later got published. apart from that, I have also given some presentations on certain amendments/complex issues in various forms.
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Related Book For
Financial Management Theory and Practice
ISBN: 978-0176517304
2nd Canadian edition
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
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Related Video
A stock buyback is when a public company uses cash to buy shares of its own stock on the open market. A company may do this to return money to shareholders that it doesn\\\\\\\'t need to fund operations and other investments.This video will give you detailed overview about how stock buy back works and how it is useful tool for companies to raise capital .
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