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ER eBook Commonwealth Construction (CC) needs $1 million of assets to get started, and it expects to have a basic earning power ratio of 20%.

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ER eBook Commonwealth Construction (CC) needs $1 million of assets to get started, and it expects to have a basic earning power ratio of 20%. CC will own no securities, all of it income will be operating income. If it so chooses, CC can finance up to 40% of its assets with debt, which will have a 10% Interest rate. Ir it chooses to use debt, the firm wil nane using only debt and common equity, so no preferred stock will be used. Assuming a 25% tax rate on taxable income, what is the difference between Ccs expected Reitit finances these assets with 40% debt versus is expected ROE fit finances these assets entirely with common stock? Round your answer to two decimal places percentage points

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