A firm has total assets of $1,000,000 and a debt ratio of 30 percent. Currently, it has sales of $2,500,000, total fixed costs of $1,000,000, and EBIT of $50,000. If the firm's before-tax cost of debt is 10 percent and the firm's tax rate is 40 percent, what is the firm's ROE?
A) 1.7%
B) 2.5%
C) 6.0%
D) 8.3%
E) 9.8%

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The Answer of A firm has total assets of $1,000,000 and a debt ratio of 30 percent. Currently, it has sales of $2,500,000, total fixed costs of $1,000,000, and EBIT of $50,000. If the firm's before-tax cost of debt is 10 percent and the firm's tax rate is 40 percent, what is the firm's ROE?
A) 1.7%
B) 2.5%
C) 6.0%
D) 8.3%
E) 9.8%

A Firm Has Total Assets of $1,000,000 and a Debt