Question: when theres lower WACC, why does ROA have to be reduced to satisfy rate of return required by shareholders? the previous WACC is 10%, but

when theres lower WACC, why does ROA have to be reduced to satisfy rate of return required by shareholders?
the previous WACC is 10%, but the current WACC becomes 8%.

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!

Q:

EZ-Windows, Inc., manufactures replacement windows for the home remodeling business. In January, the company produced 15,000 windows and ended the month with 9000 windows in inventory. EZ-Windows...

Q:

Prepare the financial analysis to support your decision between bankruptcy,voluntary reorganization,and Chapter11reorganization.It must be complete and prepared in a professional level,with the...

Q:

Q1-Explain how the EBIT Chart works (inputs determining the outputs-the two lines on the chart Case Leahy Bread Company (LBC) in Cohen Finance Workbook, page 111( a 'caselette') SEE THE IS/BS MODEL &...

Q:

Question 1 The Jumbo Group restaurant chain launched its initial public offering (IPO) in October 2015. As a financial analyst of Tiger Investment Fund, your boss has requested for you to brief her...

Q:

SUSTAINABILITY AND STRATEGIC AUDIT True or False 1. The evaluation of suitability is also called the criteria of inconsistency. 2. Acceptability is concerned with whether an alternative address the...

Q:

SUSTAINABILITY AND STRATEGIC AUDIT True or False 1. The evaluation of suitability is also called the criteria of inconsistency. 2. Acceptability is concerned with whether an alternative address the...

Q:

SUSTAINABILITY AND STRATEGIC AUDIT True or False 1. The evaluation of suitability is also called the criteria of inconsistency. 2. Acceptability is concerned with whether an alternative address the...

Q:

SUSTAINABILITY AND STRATEGIC AUDIT True or False 1. The evaluation of suitability is also called the criteria of inconsistency. 2. Acceptability is concerned with whether an alternative address the...

Q:

SUSTAINABILITY AND STRATEGIC AUDIT True or False 1. The evaluation of suitability is also called the criteria of inconsistency. 2. Acceptability is concerned with whether an alternative address the...

Q:

RJR Nabisco: A Case Study of a Complex Leveraged Buyout (Financial Analyst Journal, 1991) Read the case carefully then answer the following review questions: A brief summary of the case. Why is the...

Q:

Exhibit1 Financial History of Marriott Corporation (dollars in millions, except per share amounts) 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 Summary of Operations Sales 1,174 1,426.0 1,633.9...

Q:

Assume that you have an asset of 20$ that pays an income of 1% after half a year. What will be the future price expiring after one year if the risk free rate is 5%?

Q:

Read the case studies and write the short summaries of them. Graded Case Study 2, Part III The training issue was only one source of conflict on the client side. Bernie Hays and Ed Hallman. the...

Q:

The dimensionless coefficients which represent the ( maximum ) earthquake acceleration as a frac tion of the acceleration due to gravity is

Q:

A manufacturing company produces steel housings for electrical equipment. The main component part of the housing is a steel trough that is made out of a 14-gauge steel coil. It is produced using a...

Q:

Analysis of the U.S. Government Budget Deficit and Net Cost of Operations. Access the most recent Financial Report of the U.S. Government at the U.S. Treasury Department Web site,...

Q:

Rotelco is one of the largest digital wireless service providers In the United States. In a recent year. It had approximately 100 direct subscribers that generated revenue of $48,500. Costs and...

Q:

One of your clients, Corey Hart, is the sole director and sole shareholder of Sunglass World Pty Ltd. The company is a retail store that specialises in selling a range of designer-label high-end...

Q:

A ( n ) continually acquires information on events. Multicultural marketing Market positioning Environmental scan Interactive marketing

Q:

Why should a supervisor insist that HR provide statistics related to turnover, cost per hire, and average time to fill a position?

Q:

How can an HR department assist department managers to control rumors?

Q:

=+What is your favorite part of working in your social media area of expertise?