. Company A and Company B have the same tax rate, the same total assets, and the same basic earning power. Both companies have a basic earning power that exceeds their before-tax costs of debt, rd. However, Company A has a higher debt ratio and higher interest expense than Company B. Which of the following statements is CORRECT? (ROA = Net Income / Assets and ROE = Net Income / Equity)

a. Company A has a higher net income than Company B.

b. Company A has a lower ROA than Company B.

c. Company A has a lower ROE than Company B.

d. The two companies have the same ROA.

e. The two companies have the same ROE.