a-1 |
ROE = EBIT*(1-tax rate)/Market value |
Recession |
ROE = EBIT*(1-recession impact%)*(1-tax rate)/market value |
ROE=43000*(1-0.28)*(1-0)/273600 |
ROE=11.32 |
Normal |
ROE = EBIT*(1-tax rate)/Market value |
ROE=43000*(1-0)/273600 |
ROE=15.72 |
Expansion |
ROE = EBIT*(1+Growth impact%)*(1-tax rate)/Market value |
ROE=43000*(1+0.17)*(1-0)/273600 |
ROE=18.39 |
a-2 |
%age change in ROE for Recession |
=(ROE recession/ROE normal-1)*100 |
=(0.1132/0.1572-1)*100 |
=-28% |
%age change in ROE for Growth |
=(ROE Growth/ROE normal-1)*100 |
=(0.1839/0.1572-1)*100 |
=16.98% |
b-1 |
New market value = old market value-debt |
=273600-145000 |
=128600 |
ROE = (EBIT-debt*interest%)*(1-tax rate)/new market value |
Recession |
ROE = (EBIT*(1-recession impact%)-debt*interest %age)*(1-tax rate)/new market value |
ROE=(43000*(1-0.28)-145000*0.06)*(1-0)/128600 |
ROE=17.31 |
Normal |
ROE = (EBIT-debt*interest%)*(1-tax rate)/new market value |
ROE=(43000-145000*0.06)*(1-0)/128600 |
ROE=26.67 |
Expansion |
ROE= (EBIT*(1+growth impact%)-debt*interest %age)*(1-tax rate)/new market value |
ROE=(43000*(1+0.17)-145000*0.06)*(1-0)/128600 |
ROE=32.36 |
b-2 |
%age change in ROE for Recession |
=(ROE recession/ROE normal-1)*100 |
=(0.1731/0.2667-1)*100 |
=-35.1% |
%age change in ROE for Growth |
=(ROE Growth/ROE normal-1)*100 |
=(0.3236/0.2667-1)*100 |
=21.33% |
Please ask remaining parts seperately |
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