High Leverage (HL) and Low Leverage (LL) are two firms that are identical except of their capital structure which also affects their interest expense (higher leverage firms typically pay higher interest rates). Each firm has $1,800,000 in invested capital, $408,000 in earnings before interest and taxes (EBIT), and is in the 35% tax bracket. Firm HL has a debt-to-capital ratio of 55% and pays a 13% interest rate on its debt, while Firm LL has a debt-to-capital ratio of 40% and pays an 11% interest rate on its debt. What is the return on equity for HL and LL, respectively? 17.72%;17.37% (B) 17.72%;22,41% 19.79%;22.41% (D) 19.79%;24.02% 20.76%;24.02% Evans Inc.'s next expected dividend is $1.50 per share. The growth rate of its dividends is expected to be 3.0% and its common stock is currently trading at $24.00 per share. The company thinks it can net $23.04 per share after flotation costs if it sells new shares of stock. What is the company's cost of new common stock, re ? (A) 7.06% (B) 7.92% (C) 8.01% (D) 9.51% (E) 9.87% High Leverage (HL) and Low Leverage (LL) are two firms that are identical except of their capital structure which also affects their interest expense (higher leverage firms typically pay higher interest rates). Each firm has $1,800,000 in invested capital, $408,000 in earnings before interest and taxes (EBIT), and is in the 35% tax bracket. Firm HL has a debt-to-capital ratio of 55% and pays a 13% interest rate on its debt, while Firm LL has a debt-to-capital ratio of 40% and pays an 11% interest rate on its debt. What is the return on equity for HL and LL, respectively? 17.72%;17.37% (B) 17.72%;22,41% 19.79%;22.41% (D) 19.79%;24.02% 20.76%;24.02% Evans Inc.'s next expected dividend is $1.50 per share. The growth rate of its dividends is expected to be 3.0% and its common stock is currently trading at $24.00 per share. The company thinks it can net $23.04 per share after flotation costs if it sells new shares of stock. What is the company's cost of new common stock, re ? (A) 7.06% (B) 7.92% (C) 8.01% (D) 9.51% (E) 9.87%