Problem 20-02

Fill in the table using the following information. Assets required for operation: $3,800 Case Afirm uses only equity financing Case Bfirm uses 30% debt with a 10% interest rate and 70% equity Case Cfirm uses 50% debt with a 12% interest rate and 50% equity If your answer is zero, enter "0". Round your answers for monetary values to the nearest cent. Round your answers for percentage values to one decimal place.

	A		B		C
Debt outstanding	$		$		$
Stockholders' equity	$		$		$
Earnings before interest and taxes	$874.00		$874.00		$874.00
Interest expense	$		$		$
Earnings before taxes	$		$		$
Taxes (40% of earnings)	$		$		$
Net earnings	$		$		$
Return on stockholders equity	%		%		%

What happens to the rate of return on the stockholders' investment as the amount of debt increases?

The rate of return on the stockholders' investment -Select-increasesdecreasesdoes not changeItem 22 as the amount of debt increases.