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

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 Firm HD Firm LD Assets 1,100 Debt Ratio 60% Debt Ratio 30% EBIT 275 Interest Rate 14% Interest Rate 12% Tax Rate 25% Group of answer choices

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