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Problem 20-04 Fill in the table using the following information. Assets required for operation: $5,600 Case A-firm uses only equity financing Case B-firm uses 40%
Problem 20-04 Fill in the table using the following information. Assets required for operation: $5,600 Case A-firm uses only equity financing Case B-firm uses 40% debt with a 10% interest rate and 60% equity Case C-firm uses 50% debt with a 14% interest rate and 50% equity If the 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. Debt outstanding Stockholders' equity Earnings before interest and taxes Interest expense Earnings before taxes Taxes (40% of earnings) Net earnings Return on stockholders' equity $ $ $ $ $ $ A $840 % $ $ $ $ $ $ B $840 % $ $ $ $ $ $840 % What happens to the return on the stockholders' equity as the amount of debt increases? Why did the rate of interest increases in case C? The return on stockholders' equity [-Select- as the firm becomes -Select-financially leveraged. The rate of interest increase in case C due to the [-Select- in the financial risk
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