2. 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...

2. 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 C—firm uses 50% debt with a 12% interest rate and 50% equity A B C A B C Debt outstanding $ $ $ Stockholders’ equity Earnings before interest and taxes 300 300 300 Interest expense Earnings before taxes Taxes (40% of earnings) Net earnings Return on stockholders’ equity % % % 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?