he table below provides data on a company under two alternative capital structures and 3 possible states of the economy - the three state can roughly be described as bad, better, best. What do the numbers related to return on equity tell us about the relative advantages and disadvantages of debt versus equity?

		All Equity($200k)			50/50 ($100k equity, 100k debt)
Probability	0.25	0.5	0.25		0.25	0.5	0.25
Operating income	0	50,000	75,000		0	50,000	75,000
Interest expense	0	0	0		7,500	7,500	7,500
Taxable income	0	50,000	75,000		(7,500)	42,500	67,500
Taxes (30%)	0	15,000	22,500		(2,250)	12,750	20,250
Net Income	0	35,000	52,500		(5,250)	29,750	47,250
ROE	0.00%	17.50%	26.25%		-5.25%	29.75%	47.25%
Expected ROE		15.31%				25.38%
Standard deviation of ROE		9.54%				19.07%