Firms hl and ll are identical except for their financial leverage ratios and the interest rates they pay on debt. each has $12 million in invested capital, has $1.8 million of ebit, and is in the 40% federal-plus-state tax bracket. firm hl, however, has a debt-to-capital ratio of 60% and pays 13% interest on its debt, whereas ll has a 25% debt-to-capital ratio and pays only 8% interest on its debt. neither firm uses preferred stock in its capital structure. calculate the return on invested capital (roic) for each firm. round your answers to two decimal places. roic for firm ll is % roic for firm hl is % calculate the rate of return on equity (roe) for each firm. round your answers to two decimal places. roe for firm ll is % roe for firm hl is % observing that hl has a higher roe, ll's treasurer is thinking of raising the debt-to-capital ratio from 25% to 60% even though that would increase ll's interest rate on all debt to 15%. calculate the new roe for ll. round your answer to two decimal places. %

Insurance companies have internal controls in place to protect assets, monitor the accuracy of accounting records and encourage operational efficiencies and adherence to policies. these internal controls are generally of two types: administrative controls and accounting controls. administrative controls are the policies and procedures that guide the daily actions of employees. accounting controls are the policies and procedures that delineate authorizations of financial transactions that are done, safeguard assets, and provide reports on the company’s financial status in a reliable and timely manner. internal controls should include both preventative and detective controls. the purpose of preventative controls is to stop problems and errors before they occur. detective controls identify problems after they have occurred. preventative controls are usually more effective at reducing problems, but they also tend to be more expensive. internal controls must be flexible to adjust for changes in laws and regulations in addition to adding new products or modifying current ones. companies must also do regular analyses to ensure that the benefits of implementing the controls are worth their costs. when concerned about paying unwarranted insurance claims which type of control would be useful?

Examine the following book-value balance sheet for university products inc. the preferred stock currently sells for $30 per share and pays a dividend of $3 a share. the common stock sells for $16 per share and has a beta of 0.9. there are 2 million common shares outstanding. the market risk premium is 9%, the risk-free rate is 5%, and the firm’s tax rate is 40%. book-value balance sheet (figures in $ millions) assets liabilities and net worth cash and short-term securities $ 2.0 bonds, coupon = 6%, paid annually (maturity = 10 years, current yield to maturity = 8%) $ 5.0 accounts receivable 3.0 preferred stock (par value $15 per share) 3.0 inventories 7.0 common stock (par value $0.20) 0.4 plant and equipment 21.0 additional paid-in stockholders’ equity 13.6 retained earnings 11.0 total $ 33.0 total $ 33.0 a. what is the market debt-to-value ratio of the firm? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.) b. what is university’s wacc? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.)

Boone brothers remodels homes and replaces windows. ace builders constructs new homes. if boone brothers considers expanding into new home construction, it should evaluate the expansion project using which one of the following as the required return for the project?