Broward Manufacturing recently reported the following information:Net income $615,000ROA 10%Interest expense $202,950Accounts payable and accruals $950,000Broward’s tax rate is 30%. Broward finances with only debt and common equity, so it hasno preferred stock. 40% of its total invested capital is debt, and 60% of its total investedcapital is common equity. Calculate its basic earning power (BEP), its return on equity(ROE), and its return on invested capital (ROIC).

Broward Manufacturing recently reported the following information:Net income $615,000ROA 10%Interest expense $202,950Accounts payable and accruals $950,000Broward’s tax rate is 30%. Broward finances with only debt and common equity, so it hasno preferred stock. 40% of its total invested capital is debt, and 60% of its total investedcapital is common equity. Calculate its basic earning power (BEP), its return on equity(ROE), and its return on invested capital (ROIC).

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 7P

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Broward Manufacturing recently reported the following information: Net income ROA BEP: Interest expense $184,800 Accounts payable and accruals $1,000,000 Broward's tax rate is 25%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, and 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Do not round intermediate calculations. Round your answers to two decimal places. ROE: ROIC: *% % $528,000 % 8%
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