I need help with the formula to determine the ROE change in a recession or expansion. Thanks.Maynard, Inc., has no debt outstanding and a total market value of $161,000. Earnings before interest and taxes, EBIT, are projected to be $15,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 32.1 percent higher. If there is a recession, then EBIT will be 64.2 percent lower. Maynard is considering a $64,000 debt issue with a 5 percent interest rate. The proceeds will be used to repurchase shares of stock. There are currently 2,500 shares outstanding. Maynard has a market-to-book ratio of 1.0. Ignore taxes for parts (a) and (b) of this problem.Now assume that Maynard goes through with the proposed recapitalization. Return on equity, ROE, for the recession, normal, and expansion scenarios are ?? percent 12.16 percent, and ?? percent, respectively. If the economy enters a recession or expands, ROE will change by ?? percent or ?? percent, respectively.
https://nursingpapermasters.com/wp-content/uploads/2021/07/logo-300x75.png 0 0 developer https://nursingpapermasters.com/wp-content/uploads/2021/07/logo-300x75.png developer2022-02-04 01:14:522022-02-04 01:14:52Thanks. Maynard, Inc., has no debt outstanding and a total market value of $161,000.