Fill in the Table Using the Following Information $\$ 2,000$ Case $A$

question 14

Essay

Fill in the table using the following information. Assets required for operation: $\$ 2,000$
Case $A$ - firm uses only equity financing
Case B - firm uses $30 \%$ debt with a $10 \%$ interest rate and $70 \%$ equity
Case $\mathrm { C }$ - firm uses $50 \%$ debt with a $12 \%$ interest rateand $50 \%$ equity
$\begin{array} { l c c c } & A & \text { B } & \text { C } \\ \text { Debt outstanding } & \$ & \$ & \$ \\ \text { Stockholders' equity } & & & \\ \text { Earnings before } & 300 & 300 & 300 \\ \text { interest and taxes } & & & \\ \text { Interest expense } & & & \\ \text { Earnings before taxes } & & & \\ \text { Taxes ( } 40 \% \text { of earnings) } & & & \\ \text { Net earnings } & & & \\ \text { Return on stockholders' } & \% & \% & \% \\ \text { investment } & & & \end{array}$ ​
What happens to the rate of return on the stockholders' investment as the amount of debt increases? Why did the rate of interest increase in case C?
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Definitions:

Withdrawn Behavior

A type of behavior characterized by a significant reduction in interaction with others and the external world.

Development

Qualitative or observable aspects of the progressive changes that one makes in adapting to the environment.

Cephalocaudal

A principle of development describing the pattern in which growth occurs from the head downwards through the body.

Proximal-distal

A pattern of development or movement that starts from the center or core of the body and moves outwards to the extremities.