Click here to read the eBooks Business and Financial Risk FINANCIAL LEVERAGE EFFECTS Firms ML 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 $5.75 million of EBIT, and Is in the 40% feGural-plus-state tax bracket Firm HL, however, has a debt-to-capital ratio of 55% and pays 17% interest on its debt, whereas L has a 25% debt-to-capital ratio and Days only 10% interest on its debt. Neither firm uses preferred stock in its capital structure Calculate the return on invested capital (ROC) for each fim. Round your a ar answers to two va decimal places ROIC for him ROIC for firm HL. b. Calculate the rate of retum on equity (ROE) for each firm. Round your answers to two decimal places ROE for firm LLIS ROE for firm HLIS Observing that has a higher ROELLS treasure is thinking of raising the debt-to-capital ratio from 25 to 60% even though that would increase L's interest rate on all debt to 15% Calculate the new ROE for LL. Round your answer to two decimal places One FINANCIAL LEVERAGE EFFECTS Pirms and are identical except for their financial leverage ratios and the interest rates they pay on debt. Each has $23 million in invested capital, has $5.75 million of EBIT, and is in the 40% federal-plus-state tax bracket. Firm HL, however, has a debt-to-capital ratio of 5% and pays 12% Interest on its debt, whereas LL has a 25% 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 fim. Round your answers to two decimal places HOIC for firm.is ROIC for firm HLI b. Calculate the rate of return on equity (ROE) for each firm. Round your answers to two decimal places ROE for firme ROE for firm HL is c. Observing that has a higher ROLL treasure is thinking of raising the debt-to-capital ratio from 5 to 60% even though that would increases interest rate on all detta 15%. Colate the new ROB for LL. Round your answer to two decimal places