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Question
A firm has a debt ratio of 40 percent. Currently, it has interest expense of $500,000 on $5,000,000 of total debt outstanding, and a tax rate of 40 percent. If the firm's ROA is 6 percent, by how many percentage points is the firm's ROE greater than its ROA?
a. 0.0%
b. 4.0%
c. 5.8%
d. 7.4%
e. 10.0%
Answer
This answer is hidden. It contains 167 characters.
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