a) What are the implications of the leverage effect? b) The following assumptions are given: Debt to equity ratio: 4 Return on total capital: 9% Interest on external financing: 7% Calculate the return on equity! c) How does the return on equity change if the debt to equity ratio increases to 6 ? d) How does the return on equity change compared to b) if the return on total capital declines to 5% and interest on external financing increases to 8%?