Gourmet Foods To Go has the following financial information: Debt:....................................................$0 Book Equity: ....................................$4,000,000 Tax Rate:.............................................26% EBIT:....................................................$500,000 Gourmet
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Gourmet Foods To Go has the following financial information:
Debt:....................................................$0
Book Equity: ....................................$4,000,000
Tax Rate:.............................................26%
EBIT:....................................................$500,000
Gourmet Foods decides to borrow $2,000,000 at a 7% interest rate and, with the proceeds, buy back $2,000,000 worth of their stock. Calculate return on equity before and after the loan and buy-back is made.
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Related Book For 
Financial Management Theory And Practice
ISBN: 978-0176583057
3rd Canadian Edition
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
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