Question: please help me solve this question Le to read the eBook Business and Financial Risk FINANCIAL LEVERAGE EFFECTS The Neal Company wants to estimate next

Le to read the eBook Business and Financial Risk FINANCIAL LEVERAGE EFFECTS The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $13 million, it corrently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $4.7 million with a 0.2 probability, $2.9 million with a 0.5 probability, and $0.6 million with a 0.3 probability Calculate Near's expected HOE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations Debt/Capital ratio is 0 ROE 99 CV Debt/Capital ratio is 10%, interest rate is 9%. HOE CV- Debt/Capital ratio is 50%, Interest rate is 11% ROE o CV- Debt/Capital ratio is 60% Interest rate is 14% ROE - O CV- Grade it Now Save & Continue Continue without saving EFFECTS The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $13 million, it currently uses only common quity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three pod tates of the world: $4.7 million with a 0.2 probability, $2.9 million with a 0.5 probability, and $0.6 million with a 0.3 probability Calculate N ected ROE, standard deviation and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculat Round your answers to two odmal places at the end of the alculations ebt/Capital ratio is 0. OE- % O % CV ebt/Capital ratio is 10%, Interest rate is 9%. DE O- % CV ebCapital ratio is 50%, interest rate is 11% DE- % O- % OVE bt/Capital ratio is 60%, Interest rate is 14% DE- % 96
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