(Problem I continued) Determine the linear relationship of return on equity with respect to EBIT for a...

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(Problem I continued) Determine the linear relationship of return on equity with respect to EBIT for a given amount ofdebt B for the facts as given in (b).

For $3,000,000 ofdebt, compute the return on equity for EBIT equal to

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If EBIT were known with certainty, which of two debt levels ($3,000,000 or $5,000,000) is preferred?

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