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TAP ?? Check My Work RETURN ON EQUITY hConstruction (CC? needs $1 milion of assets to get started, and it expects to have a basic earning power ratio of 10%. CC wia own no securities, so aa of its income will be operating inco me treso chooses, CC can finance up to 35% of its assets with debt, which will have an 8% interest rate. If it chooses to use debt, the finn will finance using only debt and common esty, so no preferred stock will be used. Assuming a 30% tax rate on all taxable income, what is the difference between CCs expected ROE rit finances these assets with 35% debt versus its expected ROE O these assets entirely with common stock? Round your answer to two decimal places. Check My Work
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