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BEP, ROE, AND ROIC Duval Manufacturing recently reported the following information: Net income $ 600,000 ROA 8% Interest expense $ 225,000 Accounts payable and accruals $1,000,000 Duval’s tax rate is 35%. Duval finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC).

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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977
BuyFind

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977

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Chapter
Section
Chapter 4, Problem 9P
Textbook Problem

BEP, ROE, AND ROIC Duval Manufacturing recently reported the following information:

Net income $ 600,000
ROA 8%
Interest expense $ 225,000
Accounts payable and accruals $1,000,000

Duval’s tax rate is 35%. Duval finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC).

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Chapter 4 Solutions

Fundamentals of Financial Management (MindTap Course List)
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