Fill in the table using the following information Assets required for operation: 39,600 Firm A uses only equity financing Firm Buses 30% debt with an 8% interest rate and 70% equity Firm C uses 50% debt with a 10% interest rate and 50% equity Firm Duses 50% preferred stock financing with a dividend rate of 10% and 50% equity financing Earnings before interest and taxes: $960 If your answer is zero, enter "O". Round your answers for monetary values to the nearest cent. Round your answers for percentage values to one decimal place. B D Debt $ $ $ $ Preferred stock $ $ $ $ Common stock 5 $ $ $ Earnings before interest and taxes $960.00 $960.00 5960.00 $960.00 Interest expense $ 5 $ $ Earnings before taxes 5 $ $ $ Taxes (40% of earnings) $ $ $ $ Preferred stock dividends $ $ $ $ Income available to common stockholders 5 $ Return on common stock What happens to the common stockholders' return on equity as the amount of debt increases? Why is the rate of interest greater in case c why is the return lawer when the firm uses preferred stock instead of debt? Other things equal, the return on common stock Select as the firm uses financial leverage. As the firm becomes -Select: ninancially leveraged (elect Din financial risk), the rate of interest will increase. The return is lower when the firm uses preferred stock instead of debt because the Select are not tax deductible as opposed to the select Which type of financing involves less risk for the form Assuming a comparable use. Select is less risky to the firm before interest and taxes: 5960 nswer is zero, enter "0". Round your answers for monetary values to the nearest cent. Round your answe B $ $ $ $ $ $ $ $ $960.00 $960.00 $960.00 in $ $ ed stock on stock ngs before interest and taxes est expense ngs before taxes s (40% of earnings) erred stock dividends ome available to common stockholders turn on common stock $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ % 90 %6 hat happens to the common stockholders return on equity as the amount of debt increases? Why is the rate of intere! m uses preferred stock instead of debt? Other things equal, the return on common stod Select As the firm uses financial leverage. As the firm becomes Tinancial risk), the rate of interest will increase increases ower when the firm uses preferred stock instead of debt be deducible as opposed to the Select decreases Which type of financing involves less risk for the firm? Assuming a comparable use, Select is less risky to the tim MacBook Air B: F! GOD 72 20 13 007 98 @ F2 Fa FO FU F12 * 8 8 Il + 9 0 - delete o P. ves to the nearest cent. R A B $ $ $ $ $ $ $ $ $ $ $960.00 $960.00 Debt Preferred stock Common stock Earnings before interest and taxes Interest expense Earnings before taxes Taxes (40% of earnings) Preferred stock dividends Income available to common stockholders Return on common stock $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 96 96 What happens to the common stockholders' return on equity as the amount of debt increases? Why is the firm uses preferred stock instead of debt? Other things equal, the return on common stock Select as the firm uses financial leverage. As the fi financial risk), the rate of interest will increase. The return is lower when the firm uses preferred stock inste deductible as opposed to the select preferred stock dividends Which type of financing inve interest payments Assuming a comparable use. Select less risky to the firm. MacBook Air 30 F2 DOD F3 OOOF @ 7 # 3 $ 4 A N % 5 * 6 & 7 . Q W E E R T Y A B $ $ $ $ $ $ $ $ Debt $ Preferred stock Common stock Earnings before interest and taxes $960.00 $960.00 Interest expense $ Earnings before taxes $ $ Taxes (40% of earnings) $ $ $ Preferred stock dividends $ $ $ Income available to common stockholders $ $ $ Return on common stock 96 9% What happens to the common stockholders' return on equity as the amount of debt increases? Why is firm uses preferred stock instead of debt? $ $ Other things equal, the return on common stock Select as the firm uses financial leverage. As financial risk), the rate of interest will increase. The return is lower when the firm uses preferred stock deductible as opposed to th -Select preferred stock financing Which type of financing inve debt financing Assuming a comparable use. Select- is less risky to the firm, MacBook Air SC 72 80 F3 DOO DOO OS @ 2 # 3 $ 4 A % 5 6 & 7 Q W E R T Y