Kimble Electronics is a small toy manufacturing company with total assets of $ 1.5 million. The company has the opportunity to do a leveraged recapitalization that would involve borrowing 30% to 50% of the firm€™s assets at a rate of 9% per year. The firm€™s annual return on its total investment in assets varies from 4% to 15%. Analyze the effects of financial leverage on the rate of return earned on Kimble€™s equity if the firm borrows 30% or 50% of its assets ( i. e., complete the following table). You may ignore taxes in your calculations.

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15% Return on Assets 4% Return on Assets 30% debt to assets 50% debt to assets