Assume you are given the following financial data:

financial Terminology Firm A Firm B

Total assets $2,000 $2,000

Debt@10% interest rate 0 1,200

Total Equity _____? ______?

Earnings before interest and taxes $280 $280

Interest Charges $____ $____?

Net Income(Earnings before taxes) $____ $____?

ROE = Net Income/Total Equity% _____? _____?

A. fill in the missing numbers above _____?

b. Based on the return of equity(ROE) which firm is more profitable?

c. As an investor in firm B briefly explain what might be your major concern about being leveraged?