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%

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Definitions:

Shape Fill

A feature in graphic design and office software that allows users to fill shapes with colors, patterns, or textures.

Shape Outline

In graphic design and desktop publishing, the external border or edge definition of a shape, which can be formatted with various styles, colors, and thicknesses.

Row Color

A feature in spreadsheet or database software that allows users to change the background color of individual rows for better visual differentiation.

Form Color

The background color or style of a form in a graphical user interface.