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A firm has an ROE of 5%, a debt-to-equity ratio of 0.8, and a tax rate of 35% and pays an interest rate of 8% on its debt. What is its operating ROA? ROE= [1 - tax rate] (ROA + ROA - Interest Rate) Debt/ Equit]

Respuesta :

brontealfred

Answer:

ROA= 8,2%

Explanation:

ROE= [1 - tax rate] (ROA + ROA - Interest Rate) Debt/ Equity]

5%=[1-35%](ROA+ROA-8%)0.8]

0.05 = [ 1 - 0.35 ] ( 2ROA - 0.08) 0.8]

0.05 = [0.75](2ROA-0.08)0.8]

[tex]\frac{0.05}{0.8}[/tex]=[0.75](2ROA-0.08)

0.0625 = [0.75](ROA-0.08)

[tex]\frac{0.0625}{0.75}[/tex] = 2ROA - 0.08

0.08333...=2ROA - 0.08

0.08333...+0.08 = 2ROA

0.16333... = 2ROA

∴ ROA = 0.082 (rounded off)

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