Question 2 is about Business Administration...please only answer briefly...no explanation necessary

Question 2 is about Business Administration...please only answer briefly...no explanation necessary

Operational Objectives

A company has the opportunity to realize a project that delivers a return on investment of 10.0% with a required capital investment of 1,000,000. The company can cover the required capital partly with equity and partly with borrowed capital, whereby the interest rate on borrowed capital is 5.0%. First calculate gross profit.

gross profit: [0.5 points]

Calculate the return on equity and net income below, respectively, if the company

a) half of the required capital is covered by borrowed capital

net profit:

rEK(in%):

b) covers three quarters of the required capital with borrowed capital.

net profit:

rEK(in%):

c) Has the leverage effect taken place in a positive sense? Enter yes=1 or no=0. (Hint: Remember the requirement that must apply for the leverage effect!)

Leverage effect occurred