Companies A and B have operating profits of $1,000 and $1,200, respectively. The companies get a final

Fantastic news! We've Found the answer you've been seeking!

Question:

Companies A and B have operating profits of $1,000 and $1,200, respectively. The companies get a final profit of Rp. 800 and Rp. 720. The assets used by the two companies are the same, namely Rp. 10,000. Company B's D/E ratio is 3/7; and the loan interest rate is 10%. The amount of KO is 12%, corporate tax applies at 20%.

Question
a. Calculate ROE A and B
b. Calculate to (use the formula MM 2)
c. After b, calculate EVA (Economic value added)
d. Give comments/conclusions/etc., and if you are offered to invest, are you willing?