Business, 30.05.2020 01:00 imgoingtowriteabook

Firms HD and LD are identical except for their use of debt and the interest rates they pay--HD has more debt and thus must pay a higher interest rate. Based on the data given below, how much higher or lower will HD's ROE be versus that of LD, i. e., what is ROEHD - ROELD? Do not round your intermediate calculations. Applicable to Both Firms Firm HD's Data Firm LD's Data Capital $3,000,000 wd 70% wd 20% EBIT $595,000 Int. rate 12% Int. rate 10% Tax rate 35% a. 10.28% b. 11.31% c. 10.80% d. 8.74% e. 13.37%

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Firms HD and LD are identical except for their use of debt and the interest rates they pay--HD has m...

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