Perseverance Corporation is deciding whether to pursue a restricted or relaxed current investment policy. The firm's annual sales are expected to total P3,600,000, its fixed a turnover ratio equals 4.0, and its debt and common equity are each 50% of total assets. is P150,000, the interest rate on the firm's debt is 10%, and the tax rate is 40%. If the com follows a restricted policy, its total assets turnover will be 2.5. Under a relaxed policy its assets turnover will be 2.2. What's the difference in the projected ROES under the restricted and relaxed policies? [R
Perseverance Corporation is deciding whether to pursue a restricted or relaxed current investment policy. The firm's annual sales are expected to total P3,600,000, its fixed a turnover ratio equals 4.0, and its debt and common equity are each 50% of total assets. is P150,000, the interest rate on the firm's debt is 10%, and the tax rate is 40%. If the com follows a restricted policy, its total assets turnover will be 2.5. Under a relaxed policy its assets turnover will be 2.2. What's the difference in the projected ROES under the restricted and relaxed policies? [R
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 6P
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