Question: You have the following data. What is the ROE difference between Firm L and Firm U, in order words, ROEL - ROEU = ? Firm

You have the following data. What is the ROE difference between Firm L and Firm U,

in order words, ROEL - ROEU = ?

Firm U

Capital : $30000

EBIT : $7931

Tax rate = 25%

Equity : $30000

Debt : $0

Firm L

Capital : $30000

EBIT : $7931

Tax rate = 25%

Equity : $19469

Debt : $2866

Rd (interest rate): 8%

Answer on my screen is 12.23 - That is the format.

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