Finance Assignment | Professional Writing

Last year Camden Corp. had sales of $500.000, operating costs of $450,000, and year-end assets (which is equal to its total invested capital of $395,000. The debt-to-total-capital ratio was 17%, the interest rate on the debt was 7.5%, and the firm’s tax rate was 35%.

The new CFO wants to see how the ROE would have been affected If the firm had used a 50% debt-to-total capital ratio. Assume that sales operating costs, total assets, total invested capital and the tax rate would not be effected, but the interest rate would rise to 80%. By how much would the ROE change in response to the change in the capital structure? 0 2340 100% 1715 2113 Question 12 the correc t between A and Stock A returns have standard deviation of 5. and stock returns have sta t ion of 05. What is the variance of a portfolio composed of 70 percent Stock And 30 percent Stock B 0.2179

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