operating income. If it so chooses, CC can finance up to $25\%$ of its assets with debt, which will have a $12\%$ interest rate. If it chooses to use debt, the firm will finance using only debt and

common equity, so no preferred stock will be used. Assuming a $25\%$ tax rate on taxable income, what is the difference between CC$\text{'}$s expected ROE if it finances these assets with $25\%$ debt

versus its expected ROE if it finances these assets entirely with common stock? Round your answer to two decimal places.

percentage points