Question

Skynet has equity with a market value of $1. 2 billion and debt with a value of $600 million. Skynet’s ROA is 12% and its cost of debt is 7%. What is Skynet’s Return on Equity? Assume Skynet’s tax rate is 28%.

10. 2%


12. 0%


12. 7%


13. 8%


14. 5%

Answer 1

10.2%

Step-by-step explanation:

The correct answer is 10.2%.