There are two firms: Firm U and Firm L. Both firms have $100M total assets and $15M EBIT (earnings before interest and taxes). Firm U is an unleveraged firm without debt. Firm L is a leveraged firm with 50% of debt and 50% of common equity. The pre-tax cost of debt for Firm L is 10%. Both firms have 30% corporate tax rate. Calculate the return on equity (ROE) for firm U

		10.0%
		11.5%
		14.0%
		16.2%

Based on the information from Question 31, whats the return on equity (ROE) for firm L

		10.0%
		11.5%
		14.0%
		16.2%