Firms HD and LD Are Identical Except for Their Level

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? $\begin{array}{lll}\text { Applicable to Both Firms } & \text { Firm HD's Data } & \text { Firm LD's Data } \\\text { Assets } \$ 200 & \text { Debt ratio } 50 \% & \text { Debt ratio } 30 \% \\\text { EBIT } \$ 40 & \text { Interest rate } 12 \% & \text { Interest rate } 10 \% \\\text { Tax rate } 35 \% & &\end{array}$ $\begin{array}{llll}\text { Applicable to Both Firms } & & \text { Firm HD's Data } & \text { Firm LD's Data } \\\hline \text { Assets } \$ 200 & & \text { Debt ratio } 50 \% & \text { Debt ratio 30\% } \\\text { EBTT } \$ 40 && \text { Interest rate } 12 \% & \text { Interest rate } 10 \% \\\text { Tax rate } 35 \% & &\end{array}$

A) 2.18%
B) 2.29%
C) 2.41%
D) 2.54%