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Question 19 (5 points) Firms A and B are identical except for their use of debt and the interest rates they pay-A has more debt

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Question 19 (5 points) Firms A and B are identical except for their use of debt and the interest rates they pay-A has more debt and thus must pay a higher interest rate. Based on the data given below, how much higher or lower will A's ROE be versus that of B, i.e., what is ROE,A - ROE,B? Do not round your intermediate calculations. Applicable to Both Firms: Capital: $3,000,000 EBIT: $500,000 Tax rate: 35% Firm A's Data: D/E: 70%/30%, Interest rate: 12% Firm B's Data: D/E: 10%/90%, Interest rate: 10% (Multiple Choice) Excel Link: Excel Sheet.xIsx 6.29%6.60%5.69%5.40%5.99%

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