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Firms HD and LD are identical except for their use of debt and the interest rates they pay-HD has more debt and thus must pay
Firms HD and LD are identical except for their use of debt and the interest rates they pay-HD has more debt and thus must pay a higher interest rate. Both companies are small, so they are not subject to the interest deduction limitation. Based on the data given below, how much higher or lower will HD's ROB be versus that of LD, i.e., what is ROEHD - ROELD? Do not round your intermediate calculations. a. 1.58 p.p. b. 4.43 p.p. c.11.66p.p. d. 21.19 p.p. e. 7.44 p.p
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