Homework answers / question archive / A firm needs $200,000 to start and expects Sales                                $300,000 Expenses                          $294,000 Tax rate                                   40% a

A firm needs $200,000 to start and expects Sales                                $300,000 Expenses                          $294,000 Tax rate                                   40% a

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A firm needs $200,000 to start and expects

Sales                                $300,000
Expenses                          $294,000
Tax rate                                   40%

a. What are earnings if the owners invest the $200,000?
b. If the firm borrows 40% of the $200,000 at an interest rate of 10%, what are the firm's net earnings?
c. What is the return on the owners' investment in each case?