- The projected EBIT of a firm is $450,000. The firm currently has 100,000 shares of common stock outstanding at a value of $16 per share. The firm has no debt. By how much will the ROE change if the firm borrows $500,000 at 18% interest and uses the funds to repurchase shares of stock at the market price? Ignore taxes.

A) 3.91%

B) 4.60%

C) 7.33%

D) 8.48%

E) 9.78%