You have the following information about two firms, Debt Free, Inc. and Debt Spree, Inc. Both firms have the same prospects for sales and EBIT, and both have the same level of assets, tax rate and borrowing rate. They differ in their use of debt financing.

Scenario	Sales	EBIT
Bad year	200	20
Normal year	275	28
Good year	380	48

	Debt Free		Debt Spree
Total assets	250		250
Tax rate	35	%	35	%
Debt	0		150
Equity	250		100
Borrowing rate	16	%	16	%

Calculate the interest expense for each firm:

Interest expense for Debt Free $

Interest expense for Debt Spree $

Calculate the following items for each firm for each scenario (bad year, normal year, good year): return on assets (ROA), net profit, and return on equity (ROE). (Use a minus sign to indicate negative answers. Round your answers to 2 decimal places.)

	Debt Free				Debt Spree
Scenario	ROA		Net Profit	ROE		ROA		Net Profit	ROE
Bad year		%			%		%			%
Normal year		%			%		%			%
Good year		%			%		%			%