You Have Been Given the Information Below on the Crum

question 27

Multiple Choice

You have been given the information below on the Crum Company.Crum expects sales to grow by 50% in 2011,and operating costs should increase at the same rate.Fixed assets were being operated at 40% of capacity in 2010,but all other assets were used to full capacity.Underutilized fixed assets cannot be sold.Current assets and spontaneous liabilities should increase at the same rate as sales during 2011.The company plans to finance any external funds needed as 35% notes payable and 65% common stock.After taking financing feedbacks into account,and after the second pass,what is Crum's projected ROE using the projected balance sheet method?
Information on the Crum Company:

• A) 16.98%
• B) 23.73%
• C) 25.68%
• D) 19.61%
• E) 23.24%

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Definitions:

Preoperational

A stage in Jean Piaget’s theory of cognitive development where children aged 2 to 7 years old are able to use symbols and language but do not yet understand concrete logic.

Concrete Operational

A stage in Piaget's theory of cognitive development (typically age 7-12) where children gain the ability to think logically about concrete (physical and visible) events.

Ejaculation

Ejaculation is the discharge of semen from the male reproductive tract as a result of sexual arousal.

Menstruation

The monthly shedding of the uterine lining in females, accompanied by bleeding, marking a key component of the menstrual cycle.