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Baker Industries’ net income is $26000, its interest expense is $4000, and its tax rate is...

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Finance

Baker Industries’ net income is $26000, its interest expense is$4000, and its tax rate is 35%. Its notes payable equals $24000,long-term debt equals $75000, and common equity equals $255000. Thefirm finances with only debt and common equity, so it has nopreferred stock.

What are the firm’s ROE and ROIC? Round your answers to twodecimal places. Do not round intermediate calculations.
ROE and ROIC
Net income$26,000
Interest expense$4,000
Tax rate35.00%
Notes payable$24,000
Long-term debt$75,000
Common equity$255,000
ROE
Partial Income Statement:
EBIT
Interest$4,000.00
EBT
Taxes
Net income$26,000.00
Capital Summary:
Notes payable$24,000.00
Long-term debt$75,000.00
Common equity$255,000.00
Total invested capital
ROIC

Answer & Explanation Solved by verified expert
3.7 Ratings (673 Votes)
Solution ROE1020 ROIC 808 Working Notes Return on Equity ROE Net Income Common equity 26000255000 010196078 1020 Return on invested capital ROIC    See Answer
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Baker Industries’ net income is $26000, its interest expense is$4000, and its tax rate is 35%. Its notes payable equals $24000,long-term debt equals $75000, and common equity equals $255000. Thefirm finances with only debt and common equity, so it has nopreferred stock.What are the firm’s ROE and ROIC? Round your answers to twodecimal places. Do not round intermediate calculations. ROE and ROICNet income$26,000Interest expense$4,000Tax rate35.00%Notes payable$24,000Long-term debt$75,000Common equity$255,000ROEPartial Income Statement:EBITInterest$4,000.00EBTTaxesNet income$26,000.00Capital Summary:Notes payable$24,000.00Long-term debt$75,000.00Common equity$255,000.00Total invested capitalROIC

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