Question: Firms HD and LD are identical except for their level of debt and the interest rates they pay on debt--HD has more debt and pays

Firms HD and LD are identical except for their level of

Firms HD and LD are identical except for their level of debt and the interest rates they pay on debt--HD has more debt and pays a higher interest rate on that debt. Based on the data given below, what is the difference between the two firms' ROES? Applicable to Both Firms Assets $400 EBIT $60 Tax rate 30% Firm's HD Data Debt Ratio is 50% Interest Rate is 12% Firms' LD Data Debt Ratio is 20% Interest Rate is 8%

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