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The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $15 million, it currently

The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's total capital is $15 million, it currently uses only common equity, it has no future plans to use preferred stock in its capital structure, and its federal-plus-state tax rate is 40%. The CFO has estimated next year's EBIT for three possible states of the world: $5.3 million with a 0.2 probability, $1.7 million with a 0.5 probability, and $0.9 million with a 0.3 probability. Calculate Neal's expected ROE, standard deviation, and coefficient of variation for each of the following debt-to-capital ratios. Do not round intermediate calculations. Round your answers to two decimal places at the end of the calculations.

Debt/Capital Ratio = 0

RE = %
= %
CV =

Debt/Capital Ratio = 10%, Interest Rate = 9%

RE = %
= %
CV =

Debt/Capital Ratio = 50%, Interest Rate = 11%

RE = %
= %
CV =

Debt/Capital Ratio = 60%, Interest Rate = 14%

RE = %
= %
CV =

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