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10. Consider three firms A, s . B, ad C,all of which have the following financial costs: WACC= 12% 1L (Interest rate of its liabilities)

10. Consider three firms A, s . B, ad C,all of which have the following financial costs: WACC= 12% 1L (Interest rate of its liabilities) = 6% hese three firms have the following profitability measures 5% ROA 14% 8% 10% ROE 18% 12% For each of these three firms, answer the following questions a. Is the overall enterprise profitable? b. Is the cquity of the firm profitable? Would each firm improve its profit if it increased its debt, that is increased its leverage? c

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