Firms HL and LL are identical except for their financial leverage ratios and the interest rates they pay on debt. Each has $$16$ million in invested capital, has $$2\mathrm{.}4$ million of EBIT, and is in the $25\%$ federal$-$plus$-$state tax bracket. Both firms are small with average sales of $$25$ million or less during the past $3$ years, so both are exempt from the interest deduction limitation$.$ Firm HL$,$ however, has a debt$-$to$-$capital ratio of $55\%$ and pays $12\%$ interest on its debt, whereas LL has a $40\%$ debt$-$to$-$capital ratio and pays only $10\%$ interest on its debt. Neither firm uses preferred stock in its capital structure.

Calculate the return on invested capital $($ROIC$)$ for each firm. Round your answers to two decimal places.

ROIC for firm LL:

$11\mathrm{.}25$

$\%$

ROIC for firm HL:

$11\mathrm{.}25$

$\%$

Calculate the return on equity $($ROE$)$ for each firm. Round your answers to two decimal places.

Now what is ROE for firm LL:

$\%$

ROE for firm HL:

$14$

$\%$