Question: The following information regarding EXEC ( Pty ) Ltd is available: The capital structure consists of R 1 0 0 0 0 0 0 0

The following information regarding EXEC (Pty) Ltd is available:
The capital structure consists of R10000000 equity only. For the 2023 financial year, the earnings before interest and tax that the company generated was R5000000. The income tax rate is 28%. Where applicable the interest rate 8%
Calculate the Return on Assets (ROA) and Return on Equity (ROE) if a new plant costing R6000000 is acquired by EXEC (Pty) Ltd, and it will result in EBIT increasing to R10000000? Set your calculator at four decimal places for calculations and round your final answer to a full percentage. If slight rounding differences occur - choose the alternative that is closest to your answer.
(a) ROA =43%; ROE =63%
(b) ROA =63%; ROE =43%
(c) ROA =31%; ROE =69%
(d) ROA =63%; ROE =31%
Select one:
a.
ROA =31%; ROE =69%
b.
ROA =63%; ROE =43%
c.
ROA =63%; ROE =31%
d.
ROA =43%; ROE =63%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!