u. Unde all-equity financing, projected ROE is $39,500 + $200,000 = 0.20 = 20%, but with 50 percent debt financing, projected ROE increases to $31,600 + $100,000 = 32%. 50% Debt All-Equity $150,000 E: Su Pr St. Revenues $150,000 100,000 100,000 $ 50,000 $50,000 Operating costs Operating income Interest expense Taxable income Taxes (21%) o 10,000 $ 50,000 $ 40,000 10,500 8,400 Profit $ 39.500 $ 31,600 Return on equity 20% 32% support all of the features of this document's format. Some content might be missing or displayed improperly. 2 3 4 1 1 Reflect on Exhibit 8.2 on page 229 of the text. Examine the components of the projected Profit and Loss statement. What differences do you note in the columns? What contributed to the differences? What advantages did using a 50:50 debt vs. equity ratio provide the organization with? What advantages does acquiring debt have in this scenario? How does this benefit the organization? Use examples from the text to support your . response. 100% Profit $ 39,500 Return on equity 20%