Southern Physicians, a medical group practice, is just being formed.

It will need $$2$ million of total assets to generate $$3$ million in

revenues. Furthermore, the group expects to have a profit margin

of $5$ percent. The group is considering two financing alternatives.

First, it can use all$-$equity financing by requiring each physician to

contribute his or her pro rata share. Alternatively, the practice can

finance up to $50$ percent of its assets with a bank loan. Assuming

that the debt alternative has no impact on the expected profit

margin, what is the difference between the expected ROE if the

group finances with $50$ percent debt versus the expected ROE if it

finances entirely with equity capital