Question: Firms HD and LD are identical except for their use of debt and the interest rates they pay--HD has more debt and thus must pay

Firms HD and LD are identical except for their use of

Firms HD and LD are identical except for their use of debt and the interest rates they pay--HD has more debt and thus must pay a higher interest rate. Based on the data given below, calculate Return on Equity for both firms. (2 points) Firm HD's Data Applicable to Both Firms $5,000,000 $2500 30% Wd Capital EBIT Tax rate Wd 60% 14% Firm LD's Data 20% Int. rate 8% Int. rate

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