The Neal Company wants to estimate next year's return on equity under different financial leverage ratios. Niels total capital is $19 million, it currently uses only common equity, it has no future plans to use preferred stock in it's capital structure, and it's federal plus state tax rate is 40%. The CFO has estimated next years EBIT for three possible states of the world: $5.7 million with a .2 probability, $3 million with a .5 probability, and $.9 million with a .3 probability. Calculate neals expected ROE, standard deviation, and coefficient of variation for each of the following debt to capital ratios. Do not round intermediate calculations. Round answers to two decimal places at the end of the calculations.

FINANCIAL LEVERAGE EFFECTS The Neal Company wants to estimate next year's return on equity (ROE) The CFO has estimated next year's EBIT for three possible states of the capital ratios. Do not round intermediate calculations. Round your answe Debt/Capital ratio is 0. O RE = % I % CV = Debt/Capital ratio is 10%, interest rate is 9%. RE = % % CV = Debt/Capital ratio is 50%, interest rate is 11%. RE % 0 = % CV Debt/Capital ratio is 60%, interest rate is 14%. RE % % U= CV =