Question: ABC Inc. is evaluating a project that will require $500,000 in assets. The project is financed with 50% debt and 50% equity and is expected

ABC Inc. is evaluating a project that will require $500,000 in assets. The project is financed with 50% debt and 50% equity and is expected to generate earnings before interest and taxes of $90,000. The firm has a tax rate of 16% and pays 4% interest on the debt. What is the ROE (return on equity) for this project?

26.88%

18.75%

16.00%

5.12%

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