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Fansworth inc wishes to calculate next years return on equity under different leverage ratios. farnsworth total assets are 18 million and its tax rate is

Fansworth inc wishes to calculate next years return on equity under different leverage ratios. farnsworth total assets are 18 million and its tax rate is 40 %. the company is able to estimate next years earnings for three possible states in the world. It estimates that 2019 earnings before interest and taxes will be 5 million with a .2 probability, 3 million with a .5 probability, and 500000 with a .3 probability.

1.What is the expected return on equity if the leverage ration is 10 % and the interest is 15%?

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