ROE and recapitalization At the beginning of the year you invest $$40,000$ of your own money

plus $$40,000$ that you borrowed at $5\%$ interest to purchase $$80,000$ worth of GoFast stock, which

earns a return of $13\%.$ You pay taxes on the money you make on the stock at the rate of $20\%,$

but you can deduct the interest you pay on your loan from your stock income before calculating

your tax bill.

a$.$ Calculate your net after$-$tax return on these positions.

b$.$ What would your after$-$tax return have been if you had never borrowed money and had

invested just $$40,000$ in GoFast stock?

a$.$ Your net after$-$tax return on these positions is

$\%.($Round to two decimal places.$)$

b$.$ If you had never borrowed money and had invested just $$40,000$ in GoFast stock,

your after$-$tax return on these positions would have been

$\%.($Round to two

decimal places.$)$