ROE = (EBIT – Interest)(1-Tax Rate)/Equity
ROE = (145000-0)(1-25%)/700,000
= 15.54%
ROE = (-60,000)(1-25%)/700,000
= -6.4%
With Debt
ROE = (145000-350,000*12%)(1-25%)/350,000
= 22.07%
ROE = (-60,000-42000)(1-25%)/350,000
= -21.86%
Newtown Propane is a small company and is considering a project that will require $700,000 in...
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