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  3. for story 1, please compute net income, equity, an

For Story 1, please compute Net Income, Equity, and Return on Equity. For...

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Finance

For Story 1, please compute Net Income, Equity, and Return on Equity.
For Story 2, please go back to Story 1 and change its financial structure. Assume it has issued 1,000 dollars of debt to buy back stock. Make the necessary adjustments to the right side of the Balance Sheet. Also, create a new Income Statement. Assume the rate for interest expense is 1%.
For Story 3, please go back to Story 1 and change its financial structure. Assume it has issued 1,500 dollars of debt to buy back stock. Make the necessary adjustments to the right side of the Balance Sheet. Also, create a new Income Statement. Assume the rate for interest expense is 20%. Please fill in the following chart:
Return on Equity for Story 1
Return on Equity for Story 2
Return on Equity for Story 3
1 What is the possible improvement in ROE? (Story 2 minus story 1).
A Between 0.0% and 2.3%
B Between 2.3% and 2.9%
C Between 2.9% and 3.4%
D Between 3.4% and 5.0%
2 From the peak to the ending ROE, what is the drop in ROE? (Story 3 minus story 2).
A Between 0.0% and 2.0%
B Between 2.0% and 2.4%
C Between 2.4% and 2.8%
D Between 2.8% and 5.0%
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