Quigley Inc. is considering two

financial plans for the coming year. Management expects sales to be

$$300,000,$ operating costs to be $$265,000,$ assets$($which is

equal to its total invested capital$)$to be $$200,000,$ and its

tax rate to be $35\%.$ Under Plan A it would finance the firm using

$25\%$ debt and $75\%$ common equity. The interest rate on the debt would

be $8\mathrm{.}8\%,$ but under a contract with existing bondholders the TIE

ratio would have to be maintained at or above $4\mathrm{.}0.$ Under Plan B$,$

the maximum debt that met the TIE constraint would be employed.

Assuming that sales, operating costs, assets, total invested

capital, the interest rate, and the tax rate would all remain

constant, by how much would the ROE change in response to the

change in the capital structure?$****$Can you show the

steps on how you got the answer please?$*****$