You are analyzing two firms $($U and L$)$ that are identical except that firm U uses only equity to finance its assets and firm L uses $50\%$ debt and $50\%$ equity to finance its assets. Which of the following statements about firms U and L are true:

I. Firm L will have a higher operating cash flow $($OCF$)$ than firm U$.$

II$.$ Firm L will pay less in taxes than firm U$.$

III. Firm L will have a higher ROA than firm U$.$

Multiple Choice

Statements I and II are correct.

Statements I and III are correct.

Statements II and III are correct.

Statements I, II$,$ and III are correct.