Zybeck Corp.projects operating income of $4 million next year.The firm's income tax rate is 40%.Zybeck presently has 750,000 shares of ordinary shares,which have a market value of $10 per share,no preference shares,and no debt.The firm is considering two alternatives to finance a new product: (a)the issuance of $6 million of 10% bonds,or (b)the issuance of 60,000 new shares of ordinary shares at $10 per share.If Zybeck issues ordinary shares this year,what will the firm's return on equity be next year?

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The Answer of Zybeck Corp.projects operating income of $4 million next year.The firm's income tax rate is 40%.Zybeck presently has 750,000 shares of ordinary shares,which have a market value of $10 per share,no preference shares,and no debt.The firm is considering two alternatives to finance a new product: (a)the issuance of $6 million of 10% bonds,or (b)the issuance of 60,000 new shares of ordinary shares at $10 per share.If Zybeck issues ordinary shares this year,what will the firm's return on equity be next year?