Hernandez Corporation Expects to Have the Following Data During the Coming

question 20

Multiple Choice

Hernandez Corporation expects to have the following data during the coming year. What is Hernandez's expected ROE?
$\begin{array}{l}\begin{array}{lc}\text { Assets } & \$ 200,000 \text { Interest rate } &8\%\\\text { D/A } & 65 \% \text { Tax rate } &40\%\\\text { EBIT } & \$ 25,000\end{array}\\\end{array}$

• A) 12.51%
• B) 13.14%
• C) 13.80%
• D) 14.49%
• E) 15.21%

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuer, which may differ from its market value.

Offering Price

The initial price at which a company's shares are made available to the public during an Initial Public Offering (IPO).