Assume that Meyer Corporation is percent equity financed and has the

Question

Assume that Meyer Corporation is 100 percent equity financed, and has the following information:

(1) Earnings before taxes = $1,500;

(2) Sales = $5,000;

(3) Dividend payout ratio = 60%;

(4) Total assets turnover = 2.0;

(5) Applicable tax rate = 30%

The firm's return on equity is:

a. 25%.

b. 30%.

c. 35%.

d. 42%.

e. 50%.

Answer

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