You Have Been Given the Information Below on the Crum

question 5

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%

---

Definitions:

Ethical Conduct

Refers to the practice of making decisions and taking actions that are guided by a set of moral principles and values.

Corporate Support

Assistance provided by businesses, often in the form of funding, resources, or services, to support various causes, projects, or communities.

Competitive Advantage

A condition or circumstance that puts a company in a favorable or superior business position compared to its competitors.

Business Ethics

The study of appropriate business policies and practices with regard to potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, and corporate social responsibility.