For the corporation below, please show your work and do the following:

1. Calculate the Return on Equity (ROE) for Years 1 and 2 with the Net Income being the same each year at $57,125. (4 pts.)
2. State what the impact of less long-term debt and higher equity is on ROE in Year 2 and why. (6 pts.)

Synergistic Remote Work Systems, Inc. - Years 1 and 2 Balance Sheet Excerpts:

ACCOUNT	YEAR 1	YEAR 2
Cash	150,000	171,000
Accounts Receivable	100,000	40,000
Supplies	120,000	165,000
Prepaid Expenses	12,000	93,000
Fixed Assets	335,000	405,000
Accounts Payable	70,000	107,000
Salaries Payable	67,000	42,000
Long-term Debt	475,000	235,000
Owner's Equity	105,000	490,000