8. Problem 14.05 (Financial Leverage Effects) eBook Book Firms HL and LL are identical except for their financial leverage ratios and the interest rates they pay on debt. Each has $23 million in invested capital, has 54.6 million of EBIT, and is in the 40% federal-plus-state tax bracket. Firm HL, however, has a debt-to-capital ratio of 55% and pays 11% interest on its debt, whereas has a 40% debt-to-capital ratio and pays only 10% Interest on its debt. Neither firm uses preferred stock in its capital structure a. Calculate the return on invested capital (ROIC) for each firm. Round your answers to two decimal places ROIC for firm: 9 XS ROIC for form ML: 9 X b. Calculate the rate of return on equity (ROE) for each firm. Round your answers to two decimal places ROE for firm: 10.05 X ROE for firm HL 10.47 X c. Observing that HL has a higher ROE, LL treasurer is thinking of ring the debt-to-capita ratio from 40 to 60% even though that would increases interest rate on all debt to 15% Calculate the new ROE for LL. Round your answer to two decimal places