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Carragher &Company has a new management team that has developed an operating plan to improve upon...

Carragher &Company has a new management team that has developed an operating plan to improve upon last year’s ROE. The company will have total assets of $520,000. Caragher plans to maintain a debt ratio at 55 percent. The firm’s bankers estimate that a 5.0 percent annual interest rate will be charged for the debt financing. Further, the firm’s EBIT is projected to be $100,000 on sales of $800,000. The firm’s tax rate will be 40 percent. What s Caragher & Company expected return on equity to be following the changes?

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