Devon Inc Has a Higher ROE Than Berwyn Inc

Multiple Choice

Devon Inc. has a higher ROE than Berwyn Inc. (17 percent compared to 14 percent) , but it has a lower EVA than Berwyn. Which of the following factors could explain the relative performance of these two companies?

A) Devon is much larger than Berwyn.
B) Devon is riskier, has a higher WACC, and a higher cost of equity.
C) Devon has a higher operating income (EBIT) .
D) Statements a and b are correct.
E) All of the statements above are correct.