Please explain how to solve the second question and show all steps. And solve the multiple choice.Thank you

Aero Company is able to earn a 12% return on assets. The Company can issue bonds that have an 8% interest rate. Based on this information alone Multiple Choice 0 the company's return on equity will decrease if the company issues bonds and Invests the proceeds. o the company's return on equity will increase if the company issues bonds and Invests the proceeds. the company's return on equity will not be affected if the company issues bonds and Invests the proceeds. The answer cannot be determined from the Information provided. Aero Company is able to earn a 12% return on assets. The Company can issue bonds that have an 8% interest rate. On January 1. Year 3 the company had assets and stockholders' equity of $20,000. Also, on January 1. Year 3 the company issued $10,000 of bonds and invested the proceeds. As a result of financial leverage, the return on equity at the end of Year 3 will Multiple Choice O Increase from 8% to 12%. O decrease from 18% to 12% increase from 12% to 18% decrease from 12% to 8%. The following information is drawn from the income statements of East Company and West Company. East $ 60,000 (12,000) 48,000 (14,400) West $ 40,000 (10,000) 40,000 Income before interest and taxes (EBIT) Interest expense Income before taxes Income tax expense for East $48,000 x .30 Income tax expense for West $40,000 * .30 Net Income 12,000 $ 28,000 33,600 All other things being equal, Multiple Choice East Company is more likely to be able to make its legally required interest payments than West Company. East Company is less likely to be able to make its legally required interest payments than West Company. C) East Company and West Company are equally able to make their legally required interest payments. C) The answer cannot be determined using the information provided