Firms HL and LL are identical except for their financial leverage ratios and the interest rates...

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Finance

Firms HL and LL are identical except for their financialleverage ratios and the interest rates they pay on debt. Each has$18 million in invested capital, has $2.7 million of EBIT, and isin the 40% federal-plus-state tax bracket. Firm HL, however, has adebt-to-capital ratio of 60% and pays 13% interest on its debt,whereas LL has a 20% debt-to-capital ratio and pays only 10%interest on its debt. Neither firm uses preferred stock in itscapital structure.
Calculate the return on invested capital (ROIC) for each firm.Round your answers to two decimal places.
ROIC for firm LL is .
ROIC for firm HL is .
Calculate the rate of return on equity (ROE) for each firm.Round your answers to two decimal places.
ROE for firm LL is %
ROE for firm HL is %
Observing that HL has a higher ROE, LL's treasurer is thinkingof raising the debt-to-capital ratio from 20% to 60% even thoughthat would increase LL's interest rate on all debt to 15%.Calculate the new ROE for LL. Round your answer to two decimalplaces. %

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Firms HL and LL are identical except for their financialleverage ratios and the interest rates they pay on debt. Each has$18 million in invested capital, has $2.7 million of EBIT, and isin the 40% federal-plus-state tax bracket. Firm HL, however, has adebt-to-capital ratio of 60% and pays 13% interest on its debt,whereas LL has a 20% debt-to-capital ratio and pays only 10%interest on its debt. Neither firm uses preferred stock in itscapital structure.Calculate the return on invested capital (ROIC) for each firm.Round your answers to two decimal places.ROIC for firm LL is ____.ROIC for firm HL is ____.Calculate the rate of return on equity (ROE) for each firm.Round your answers to two decimal places.ROE for firm LL is____ %ROE for firm HL is ____%Observing that HL has a higher ROE, LL's treasurer is thinkingof raising the debt-to-capital ratio from 20% to 60% even thoughthat would increase LL's interest rate on all debt to 15%.Calculate the new ROE for LL. Round your answer to two decimalplaces. ____%