A Firm Has a Tax Burden of 0

question 27

Multiple Choice

A firm has a tax burden of 0.7, a leverage ratio of 1.3, an interest burden of 0.8, and a return-on-sales ratio of 10%. The firm generates $2.28 in sales per dollar of assets. What is the firm's ROE?

• A) 12.4%
• B) 14.5%
• C) 16.6%
• D) 17.8%

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Definitions:

Eurobond

A bond denominated in a currency other than that of the country in which it is sold.

Denominated

Defined or stated in the context of a specific currency or measurement unit.

Currency

Medium of exchange, in the form of banknotes and coins, that is officially used in a country or economic region.

Foreign Bond

A bond denominated in the currency of the country in which it is sold, but issued by a foreign borrower.