Your current shareholder equity is $483,500, and your long-term debt is $324,670. Last year, you earned a net income of $64,653.60. The largest contributor to this ROIC is that you required additional capital to invest in a new manufacturing process, but it took all year to implement, so you saw no benefits to your net income. You believe that you will not need to incur any debt in the next year, and this process should increase your net income by 64%. What is your new ROIC?
Your current shareholder equity is $483,500, and your long-term debt is $324,670. Last year, you earned a net income of $64,653.60. The largest contributor to this ROIC is that you required additional capital to invest in a new manufacturing process, but it took all year to implement, so you saw no benefits to your net income. You believe that you will not need to incur any debt in the next year, and this process should increase your net income by 64%. What is your new ROIC?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Your current shareholder equity is $483,500, and your long-term debt is $324,670. Last year, you earned a net income of $64,653.60. The largest contributor to this ROIC is that you required additional capital to invest in a new manufacturing process, but it took all year to implement, so you saw no benefits to your net income. You believe that you will not need to incur any debt in the next year, and this process should increase your net income by 64%. What is your new ROIC?
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