Reference for questions below WORKING CAPITAL POLICY Calgary Company is thinking of modifying its working capital assets policy. Fixed assets are P600,000, sales are projected at P3 million, the...


Reference for questions below<br>WORKING CAPITAL POLICY<br>Calgary Company is thinking of modifying its working capital assets policy. Fixed assets are P600,000, sales are<br>projected at P3 million, the EBIT/sales ratio is projected at 15%, the interest rate is 10% on all debt, the tax rate is<br>40%, and Calgary plans to maintain a 50% debt-to-assets ratio. Three altemative current asset policies are under<br>consideration: 40%, 50%, and 60% of projected sales.<br>What is the expected return on<br>equity under restricted 40%?<br>Your answer<br>What is the expected return on<br>equity under moderate 50%?<br>Your answer<br>What is the expected return on<br>equity under relaxed 60%?<br>Your answer<br>

Extracted text: Reference for questions below WORKING CAPITAL POLICY Calgary Company is thinking of modifying its working capital assets policy. Fixed assets are P600,000, sales are projected at P3 million, the EBIT/sales ratio is projected at 15%, the interest rate is 10% on all debt, the tax rate is 40%, and Calgary plans to maintain a 50% debt-to-assets ratio. Three altemative current asset policies are under consideration: 40%, 50%, and 60% of projected sales. What is the expected return on equity under restricted 40%? Your answer What is the expected return on equity under moderate 50%? Your answer What is the expected return on equity under relaxed 60%? Your answer

Jun 05, 2022
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