The Neal Company wants to estimate next year's return on equity $($ROE$)$ under different financial leverage ratios. Neal's total capital is $$12$ 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 pFINANCIAL LEVERAGE EFFECTS

The Neal Company wants to estimate next year's return on equity $($ROE$)$ under different financial leverage ratios. Neal's total capital is $$12$ 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:

$$5\mathrm{.}8$ million with a $0\mathrm{.}2$ probability, $$3\mathrm{.}1$ million with a $0\mathrm{.}5$ probability, and $$0\mathrm{.}6$ million with a $0\mathrm{.}3$ 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 is $0.$

$RE=\%$

$=$

$CV=$

Debt$/$Capital ratio is $10\%,$ interest rate is $9\%.$

$RE=$

$=\%$

$CV=$

Debt$/$Capital ratio is $50\%,$ interest rate is $11\%.$

$RE=\%$

$=$

$CV=$

Debt$/$Capital ratio is $60\%,$ interest rate is $14\%.$

$RE=\%$

$=\%$

$CV=$ossible states of the world: $$5\mathrm{.}8$ million with a $0\mathrm{.}2$ probability, $$3\mathrm{.}1$ million with a $0\mathrm{.}5$ probability, and $$0\mathrm{.}6$ million with a $0\mathrm{.}3$ 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 is $0.$

R$$E $=\%$

$\backslash$sigma $=\%$

CV $=$

Debt$/$Capital ratio is $10\%,$ interest rate is $9\%.$

R$$E $=\%$

$\backslash$sigma $=\%$

CV $=$

Debt$/$Capital ratio is $50\%,$ interest rate is $11\%.$

R$$E $=\%$

$\backslash$sigma $=\%$

CV $=$

Debt$/$Capital ratio is $60\%,$ interest rate is $14\%.$

R$$E $=\%$

$\backslash$sigma $=\%$

CV $=$