Q 12.28: A company has a debt to equity ratio of 40 percent. Its return on assets is 12.5% with an effective tax rate of 28%. If its cost of debt is 4% and total assets equal $2,400 million, what is its return on equity (ROE)? How does it compare with its competitor that has an ROE of 20 percent? A Its ROE is 20.00%, which is equal to the competitor's. B Its ROE is 17.50%, which is lower than the competitor's. Its ROE is 16.35%, which is lower than the competitor's. D Its ROE is 24.50%, which is higher than the competitor's