Question: Firms A and B are identical except for their use of debt and pay-A has more debt and thus must pay a higher interest given

 Firms A and B are identical except for their use of

Firms A and B are identical except for their use of debt and pay-A has more debt and thus must pay a higher interest given below, how much higher or lower will A's ROE be ver ROE,A - ROE,B? Do not round your intermediate calculatic Applicable to Both Firms: Capital: $3,000,000 EBIT: $500,000 Tax rate: 35% Firm A's Data: D/E: 70\%/30\%, Interest rate: 12% Firm B's Data: D/E: 10\%/90\%, Interest rate: 10% (Multiple Choice) Excel Link: Excel Sheet.xIsx 5.69% 5.99% 6.29% 6.60% 5.40\%

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