A company is considering issuing $10 million in new bonds to repurchase $10 million of its own common stock. The company currently has a debt-to-equity ratio of 0.5. Assuming the interest rate on new debt is lower than the company's return on assets, what is the most likely immediate impact on the company's Return on Equity (ROE) and Times Interest Earned (TIE) ratio?

1. ROE Impact: The share buyback reduces the Equity denominator. Since the cost of debt is lower than the return on assets (positive financial leverage), the remaining shareholders earn a higher return. Thus, ROE increases.<br/>2. TIE Impact: Times Interest Earned = EBIT / Interest Expense. Issuing bonds increases Interest Expense. EBIT is unaffected by financing decisions. Therefore, the denominator increases, causing the TIE ratio to decrease.