Fast Track Inc.is in the process of acquiring another business.In light of the acquisition,shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity).The two proposals being contemplated are detailed below:
Requirements:
a.Calculate the estimated return on equity (ROE)under the two proposals.(ROE ~ net income after taxes / market value of equity; net income after taxes = (EBIT - interest on long-term debt)× (I - tax rate).)
b.Which proposal will generate the higher estimated ROE?
Definitions:
Clinically Significant
A measure of intensity, duration, or frequency of symptoms that signifies a notable departure from normal functioning.
Emotion Regulation
The methods or strategies individuals use to manage and control their emotional responses to situations.
Cognition
The activity of understanding and learning through the acts of contemplation, undergoing experiences, and the faculties of the senses.
Biologically Influenced
Pertaining to traits, behaviors, or disorders that are shaped in part by genetic, physiological, and neurological factors.
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