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(Answered)-The Calgary company is attempting to establish a current asset


The Calgary company is attempting to establish a current asset policy. Fixed assets are $600,000 and the firm plans to maintain a 50% debt to asset ratio. Calgary has no operating current liabilities. The interest rate of 10% on all the debt. Three alternative current asset policies are under consideration: 40, 50 and 60% of projected sales. The company expects to earn 15% before interest and taxes on sales of $3 million. Calgary effective federal-plus-state tax rate is 40%. What is the expected return on equity under each alternative

 


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DATE ANSWERED

Oct 07, 2020

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