14-7 Firms ABC and XYZ are identical except for their use of debt and the interest rates they pay. ABC has more debt and must pay a higher interest rate. Based on the data as shown below, how much higher or lower will ABC's ROE be versus that of XYZ, i.e., what is ROEABC ROExyz? Applicable to Both Firms Firm ABC's Data Firm XYZ's Data Assets $3,000,000 Debt ratio 70% Debt ratio 20% EBIT $500,000 Int. rate 12% Int. rate 10% Tax rate 35%