How to solve

A

B

C

E

F

$G$

H

For Story $2,$ please go back to Story $1$ and change its financial structure.

Assume it has issued $1,000$ dollars of debt to buy back stock. Make the necessary adjustments to the right side of the Balance Sheet.

Also, create a new Income Statement. Assume the rate for interest expense is $12\%.$

For Story $3,$ please go back to Story $1$ and change its financial structure.

Assume it has issued $1,500$ dollars of debt to buy back stock. Make the necessary adjustments to the right side of the Balance Sheet.

Also, create a new Income Statement. Assume the rate for interest expense is $21\%.$

Please fill in the following chart:

Return on Equity for Story $1$

Return on Equity for Story $2$

Return on Equity for Story $3$

$$

$1$ What is the possible improvement in ROE? $($Story $2$ minus story $1).$

A Between $0\mathrm{.}0\%$ and $2\mathrm{.}3\%$

B Between $2\mathrm{.}3\%$ and $2\mathrm{.}9\%$

C Between $2\mathrm{.}9\%$ and $3\mathrm{.}4\%$

D Between $3\mathrm{.}4\%$ and $5\mathrm{.}0\%$

Sheet$1$

$q(74)|q(75)|q(76)$

q $(77)$

Blank Sheet

Ready