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  3. this year baldwin achieved an roe of 29.8%. suppos

This year Baldwin achieved an ROE of 29.8%. Suppose the Board of Directors of Baldwin...

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Accounting

This year Baldwin achieved an ROE of 29.8%. Suppose the Board of Directors of Baldwin mandates that management take measures to increase financial Leverage (=Assets/Equity) next year. Assuming Sales, Profits, and Assets remain the same next year, what effect would you expect this new Leverage policy will have on Baldwin ROE?

Select : 1

  • Baldwin ROE will decrease.

  • Baldwin ROE will increase.

  • Baldwin ROE will remain the same.

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