ROE and Leverage. Suppose the company in Problem I has a market-ta-book ratio of 1.0.

ROE and Leverage. Suppose the concourse in Whole I has a market-ta-book fitness of 1.0.

a. Apportion reappear on equity, ROE, below each of the three economic scenarios anteriorly any liability is issued. Also, apportion the percentage changes in ROE for economic comment and recession, coxcombical no taxes.

h. Repeat sever (a) coxcombical the l1rm goes through delay the incomplete recapitalization.

c. Repeat severs (a) and (b) of this whole coxcombical the unshaken has a tax rate of 35 percent.