Firms hl and ll are identical except for their financial leverage ratios and the interest rates they pay on debt. each has $20 million in invested capital, has $4 million of ebit, and is in the 40% federal-plus-state tax bracket. firm hl, however, has a debt-to-capital ratio of 50% and pays 12% interest on its debt, whereas ll has a 30% debt-to-capital ratio and pays only 10% interest on its debt. neither firm uses preferred stock in its capital structure.

a. calculate the return on invested capital (roic) for each firm.

b. calculate the return on equity (roe) for each firm.

c. observing that hl has a higher roe, ll’s treasurer is thinking of raising the debt-to-capital ratio from 30% to 60% even though that would increase ll’s interest rate on all debt to 15%. calculate the new roe for ll.

Reynolds corp. factors $400,000 of accounts receivable with mateer finance corporation on a without recourse basis on july 1, 2015. the receivables records are transferred to mateer finance, which will receive the collections. mateer finance assesses a finance charge of 1 ½ percent of the amount of accounts receivable and retains an amount equal to 4% of accounts receivable to cover sales discounts, returns, and allowances. the transaction is to be recorded as a sale.required: a. prepare the journal entry on july 1, 2015, for reynolds corp. to record the sale of receivables without recourse.b. prepare the journal entry on july 1, 2015, for mateer finance corporation to record the purchase of receivables without recourse— think through this.c. explain the difference between sale of receivables with recourse as oppose to without recourse.