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Business, 27.06.2019 05:10 Derp5013

Ast year hamdi corp. had sales of $500,000, operating costs of $450,000, and year-end assets (which is equal to its total invested capital) of $435,000. the debt-to-total-capital ratio was 17%, the interest rate on the debt was 7.5%, and the firm's tax rate was 35%. the new cfo wants to see how the roe would have been affected if the firm had used a 50% debt-to-total-capital ratio. assume that sales, operating costs, total assets, total invested capital, and the tax rate would not be affected, but the interest rate would rise to 8.0%. by how much would the roe change in response to the change in the capital structure? do not round your intermediate calculations.

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