Question: Sombra Corp. is considering a project that will require $700,000 in assets. The project will be financed with 100% equity. The company faces a tax

 Sombra Corp. is considering a project that will require $700,000 in
assets. The project will be financed with 100% equity. The company faces

Sombra Corp. is considering a project that will require $700,000 in assets. The project will be financed with 100% equity. The company faces a tax rate of 40%. What will be the ROE (return on equity) for this project if it produces an EBIT (earnings before interest and taxes) of $150,000? 7.7% 12.9% 14.2% 11.0% Determine what the project's ROE will be if its EBIT IS - $40,000. When calculating the tax effects, assume that Sombra Corp. as a whole will have a large, positive income this year. -3.4% -2.796 -4.1% -3.7% Sombra Corp. is also considering financing the project with 50% equity and 50% debt. The interest rate on the company's debt will be 13%. What will be the project's ROE if it produces an EBIT of $150,000? 17.9% 12.5% 20.6% Determine what the project's ROE will be if its EBITIS -$40,000. When calculating the tax effects, assume that Sombra Corp. as a whole will have a large, positive income this year. -3.4% -2.7% -4.1% -3.7% Sombra Corp. is also considering financing the project with 50% equity and 50% debt. The interest rate on the company's debt will be 13%. What will be the project's ROE it produces an EBIT of $150,000? 17.9% 12.5% 20.6% 19.7% What will be the project's ROE if it produces an EBIT of - $40,000 and it finances 50% of the project with equity and 50% with debt? When calculating the tax effects, assume that Sombra Corp. as a whole will have a large, positive income this year. -14.7% -19.1% 0 -13.2%

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