The return on stockholders' equity -[Select-increases-decreases-increases and then decreases-decreases and then increases-does not change] as the firm becomes -[Select-less-more] financially leveraged. The rate of interest increase in case C due to the [-Select-increases-decline] in the financial risk.

Assets required for operation: $5,000 Case A-firm uses only equity financing Case B-firm uses 40% debt with a 10% interest rate and 60% equity Case C-firm uses 50% debt with a 14% interest rate and 50% equity If the answer is zero, enter "O". Round your answers for monetary values to the nearest cent. Round your answers for percentage values to one decimal place. B C $ ta ta ta ta $ $750 $750 $750 $ $ $ Debt outstanding Stockholders' equity Earnings before interest and taxes Interest expense Earnings before taxes Taxes (40% of earnings) Net earnings Return on stockholders' equity $ $ $ A A A A $ A A $ $ % % % What happens to the return on the stockholders' equity as the amount of debt increases? Why did the rate of interest increases in case C? The return on stockholders' equity -Select- Vas the firm becomes -Select- V financially leveraged. The rate of interest increase in case C due to the -Select- V in the financial risk