(Please insert the answer in decimal form and round it to three decimal places if needed, example. 5.43% should be inserted as 0.054).If the return on operating assets (ROOA) is 7%, the return on net operating assets (RNOA) is 10%, net operating assets are $282, and operating liabilities are $232, what is the implicit after-tax interest rate on the operating liabilities?

Selected Answer:0.03

Correct Answer:0.034

Response Feedback:IncorrectAnswer!

(Please insert the answer in decimal form and round it to three decimal places if needed, example. 5.43% should be inserted as 0.054).If the return on operating assets (ROOA) is 7%, the return on net operating assets (RNOA) is 10%, net operating assets are $279, and operating liabilities are $211, what is the implicit after-tax interest rate on the operating liabilities?

Selected Answer:[None Given]

Correct Answer:0.030

implicit tax rate = 0.030

THIS was tutors explanations---> was wrong only worked for one

Explanation:

Return on Assets has the formula of:

Rb(1-tIa) = Ra

where:Rb= return on net assets;

Ra = return on assets;

tIa=implicit tax rate on alternative investment

To find the implicit tax rate, we need to modify the formula as:

Rb- Ra= Ia

so in application to the problem, the implicit tax rate is computed as follows:

Ia= 10% - 7%

= 3% or 0.030