K&L company has a capital of $1,000,000 with a debt ratio of 70% and paying interest for 10%. It has 15,000 shares outstanding that are expected to stay constant and it has the following information: Price Unit $100 Variable cost Unit $40 Fixed costs $400,000 Tax rate 40% The expected units sold based on probability of economic situation: Economy Good Normal Bad Probability 0.1 0.2 0.7 Units Sold 20.000 15.000 5.000 1. The ROE in a bad economic situation would be * * O a. 34% O b. -34% C. $34