The Neal Company wants to estimate next year's return on equity (ROE) under different financial leverage ratios. Neal's

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The Neal Company wants to estimate next year's return on equity
(ROE) under different financial leverage ratios. Neal's total
capital is $10 million, it currently uses only common equity, it
has no future plans to use preferred stock in its capital
structure, and its federal-plus-state tax rate is 25%. Neal is a
small firm with average sales of $25 million or less during the
past 3 years, so it is exempt from the interest deduction
limitation. The CFO has estimated next year's EBIT for three
possible states of the world: $5.9 million with a 0.2 probability,
$1.5 million with a 0.5 probability, and $300,000 with a 0.3
probability. Calculate Neal's expected ROE, standard deviation, and
coefficient of variation for each of the following debt-to-capital
ratios. Do not round intermediate calculations. Round your answers
to two decimal places.
Debt/Capital ratio is 0.
RÔE:
σ:
CV:
Debt/Capital ratio is 10%, interest rate is 9%.
RÔE:
σ:
CV:
Debt/Capital ratio is 50%, interest rate is 11%.
RÔE:
σ:
CV:
Debt/Capital ratio is 60%, interest rate is 14%.
RÔE:
σ:
CV: