Entity Y has a 60% ownership interest in Entity X. Assume that Entity X typically pays dividends equal to 40% of its income. Briefly explain whether Entity Y’s return on equity on its separate entity financial statements using the equity method would be higher, lower or the same as its return on equity on its:

(a) Separate entity financial statements using the cost method;

(b) Proportionally consolidated financial statements assuming that Entity X is a joint operation;