Assume you are given the following financial data:

Financial Terminology	Firm A (unleveraged)	Firm B (leveraged)
Total Assets	$2,000	$2,000
Debt @ 10% interest rate	0	1,200
Total Equity	_____?	____ ?
Total Debt & Equity	$2,000	$2,000
Earnings before interest and taxes	$ 280	$ 280
Interest Charges	$____	$ ___?
Net Income (Earnings before taxes)	$ ____	$ ___ ?
ROE = Net Income/Total Equity %	______% ?	______% ?

a. First fill in the missing numbers above _____ ?

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

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