solve for the return on equity for both firms.Assume a 40% tax rate and a 15% interest rate.Remember, return on equity can be solved for as net income divided by equity, or NI/E (E can be found in each firm's balance sheet found above its income statement.So, what do youthink?As you can see, debt is truly a double-edged sword!Also, what are other aspects of how a firm uses debt that you find interesting or applicable to your professional lives?