Problem 2 Heisenberg Company has identified two methods for producing playing cards. One method involves using a machine having a fixed cost of $10,000 and variable costs of $1.00 per deck of cards. The other method would use a less expensive machine (with fixed cost $5,000), but i would require greater variable costs (S1.50 per deck of cards). If the selling price per deck of cards will be the same under each method, at what level of output will the two methods produce the same net operating income (EBIT)? Problem 3 Firms XD and YD are identical except for their level of debt and the interest rates they pay on debt--XD has more debt and pays a higher interest rate on that debt. Based on the data given below, what is the difference between the two firms' ROES? Firm XD's Data Applicable to Both Firms Firm YD's Data 50% $200 Debt ratio 30% Assets Debt ratio EBIT $40 Interest rate 12% Interest rate 10% Tax rate 35%