Problem $14\mathrm{.}05($Financial Leverage Effects$)$

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$10\%$ interest on its debt. Neither firm uses preferred stock in its capital structure.

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

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

places.

c$.$ Observing that HL has a higher ROE, LL$\text{'}$s treasurer is thinking of raising the debt$-$to$-$capital ratio from $40\%$ to $60\%$ even though that would increase LL$\text{'}$s interest rate on all debt to $15\%.$ Calculate the new ROE for LL$.$ Round your answer to two decimal places.