Chang Corp. has $375,000 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $550,000, and its net income was $25,000. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would the firm need in order to achieve the 15% ROE, holding everything else constant? Do not round your intermediate calculations.
A. 10.13%
B. 8.59%
C. 10.23%
D. 10.64%
E. 9.92%
Answer: C
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Suppose a capital budgeting project generates its largest cash flows in the early years of its life(i.e., up front) rather than near the end of its life. In this situation. Which of the following statements about the project must be correct?
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