Exhibit 2Apex Climbing Gear has provided the following information for the most recent year. EBIT was...

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

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago

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