Question: Company A has a total asset value of $ 1 0 million, financed with $ 2 million in debt and $ 8 million in equity.

Company A has a total asset value of $10 million, financed with $2 million in debt and $8 million in equity. Company B has a total asset value of $10 million, financed with $8 million in debt and $2 million in equity. Both companies have an operating income of $1 million. Assuming a corporate tax rate of 25% and an interest rate of 8% on debt, the difference between the Return on Equity (ROE) between company A and company B is closest to
50%
15.1%
20.5%
5.6%

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