Firms HD and LD are identical except for their level of debt and the interest rates they pay on debt⎯HD 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?
A) 2.51%
B) 2.65%
C) 2.79%
D) 2.93%
E) 3.07%

Question

Firms HD and LD are identical except for their level of debt and the interest rates they pay on debt⎯HD 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? 
A) 2.51% 
B) 2.65% 
C) 2.79% 
D) 2.93% 
E) 3.07%

Quizplus · Accepted Answer

The Answer of Firms HD and LD are identical except for their level of debt and the interest rates they pay on debt⎯HD 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? 
A) 2.51% 
B) 2.65% 
C) 2.79% 
D) 2.93% 
E) 3.07%

Firms HD and LD Are Identical Except for Their Level