Using debt financing to enhance equity returns, Kimble Electronics is a small toy manufacturing company with total assets of $1.5 million. The company has the opportunity to do a leveraged recapitalization that would involve borrowing 30% to 50% of the firm's assets at a rate of 9% per year. The firm's annual return on its total investment in assets varies from 4% to 15%.

Analyze the effects of financial leverage on the rrate of return earned on Kimble's equity if the firm borrows 30% or 50% of its assets (i.e., complete the following table). You may ignore taxes in your calculations.

	15% Return on Assets	4% Return on Assets
30% debt to assets	?	?
50% debt to assets	?	?