In: Finance
Exhibit 2Apex Climbing Gear has provided the following information for the most recent year. EBIT was $596,850, taxes were $142,700, interest expense was $72,324, total assets are $1,835,200, gross profitwas $842,000, and total liabilities are $789,400.
17.Use Exhibit 2. What is the return on assets for Apex?(Express as a percentage to the nearest hundredth)
18.Use Exhibit 2. What is the return on equity for Apex? (Expressas a percentage to the nearest hundredth)
Exhibit 3You are considering a stock investment in one of two firms, More Debt, Inc. (MDI) and More Equity, Inc. (MEI), both of which operate in the same industry and have identical operating profits of $1,200,000. MDI finances its $2.85 million in assets with $2 million in debt (on which it pays 6.85 percent interest annually) and $0.85 million in equity. MEI finances its $2.85 million in assets with no debt and $2.85 million in equity. Both firms pay a tax rate of 28 percent on their taxable income.
19.Use Exhibit 3.What is the resulting ROA for MDI? (Express as a percentage to the nearest hundredth)
20.Use Exhibit 3.What is the resultingROA for MEI? (Expressas apercentage to the nearest hundredth