Successful use of leverage is evident when more income can be generated from the use of borrowed funds (the new assets) than it costs to actually borrow the funds.

For the events to be independent, their joint probability should equal the product of their individual probabilities = 0.50 x 0.60 x 0.80 = 0.24, or 24%. Since this is different from 35%, the events are not independent.

DuPont analysis: a system of analyzing return on assets through examining the profit margin and asset turnover. Also, the value of return on equity is analyzed through evaluating return on assets and the debt/total assets ratio.

Because the sample data, x-bar 16.8, has a z-score of -0.82 (the test value) and this z-score is not in the critical region (critical value is -2.33, the cut-off for the bottom 1% of the normal distribution), the Decision is Fail to reject H . That is, we believe this sample data came from a population whose mean
0
is 17 or more. Note- the p-value for an x-bar of 16.8 is 0.2119 or about 21%.

CFF = -213 + 375 + 50 - 128 = 84.