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Save Submit Assignment for Grading ions Problem 4.16 (Return on Equity) 4 Question 5 of 11 > O Check My Work (2 remaining) O O eBook O Commonwealth Construction (CC) needs $1 million of assets to get started, and It expects to have a basic earning power ratio of 10%. CC will own no securities, all of its Income will be operating O income. If it so chooses, CC can finance up to 40% of its assets with debt, which will have a 7% Interest rate. If it chooses to use debt, the firm will finance using only debt and common equity, so no preferred stock will be used. Assuming a 25% tax rate on taxable income, what is the difference between CC's expected ROE If it finances these assets with 40% debt versus its expected ROE If O It finances these assets entirely with common stock? Round your answer to two decimal places. percentage points O Check My Work (2 remaining) - Icon Key