Good typed solution

PROBLEM ONE: A corporation is considering several working capital policies. Annual sales are $4,475,000 Fixed assets are $1,960,000 Target capital structure calls for 68.0000% debt Earning Before Interest & Taxes (EBIT) is 14.5000% of Sales Interest rate on debt is 11% Federal plus State Tax rate is 26% Restricted policy: current assets 48.0000% of sales Moderate policy: current assets 60.0000% of sales Relaxed policy: current assets 72.0000% of sales CALCULATE: Return on Equity (ROE) under each of the proposed working capital policies Show ALL work for ALL calculations needed for final answers entered on quiz worksheet What is the difference in the projected ROEs between the high risk and low risk policies?

Problem ONE:

RETURN on EQUITY (ROE) -

Restricted Policy RETURN on EQUITY (ROE) -

Moderate Policy RETURN on EQUITY (ROE) -

Relaxed Policy ROE Difference between HIGH and LOW Risk Policies-