if you dont answer all im giving a thumb down

everything else is increse or decrese

Companies that use debt in their capital structure are said to be using financial leverage. Using levernge can increase shareholder retums, but leverage also increases the risk that shareholders bear Consider the following case: Chilly Moose Fruit Producer is considering a project that will require $700,000 in assets. The project will be financed with 100% equity. The company faces a tax rate of 40%. Assuming that the project generates an expected EBIT (earnings before interest and taxes) of $150,000, then Chilly Moose's anticipated ROE (return on equity) for the project will be: O 12.86% 09.00% 0 7.72% 9.65% In contrast, assume that the project's EBIT is only $45,000. When calculating the tax effects, assume that the entire Chilly Moose Fruit Producer will earn a large, positive income this year. The resulting ROE will be Now consider the case of the Magic Moose Manufacturing: Magic Moose Manufacturing is considering implementing a project that is identical to that being evaluated by Chilly Moose-although Magic Moose wants to finance the $700,000.00 in additional assets using 50% equity and 50% debt capital. The interest rate on Magic Moose's new debt is expected to be 13%, and the project is forecasted to generate an EBIT of $150,000. As a result, the project is expected to generate a ROE of Now assure that Magic Moose finances the same project with 50% debt and 50% equity capital, but expects it to generate an EBIT of only $45,000. Further assume that the company as a whole will generate a large, positive Income this year, such that any loss generated by the projet (with its resulting tax saving) will be offset by the company's other (positive) income. Remember, the interest rate on Magic Moose's debt is 13%. Under these conditions, it is reasonble to expect that Magic Moose will generate a ROE of: -0.13% -0.11% -0.1% -0.09% Given the ROE-related findings above for both Chilly Moose and Magic Moose, answer the following question: The use of financial leverage a firm's expected ROE, the probability of a large loss, and consequently the risk borne by the firm's stockholders. The greater a firm's chance of bankruptcy, the its optimal debt ratio will be manager is more likely to use debt in an effort to boost profits Now assume that Magic Moose finances the same project with 50% debt and 50% equity capital, but expects it to generate an EBIT of only Further assume that the company as a whole will generate a large, positive Income this year, such that any loss generated by the project (w resulting tax saving) will be offset by the company's other (positive) Income. Remember, the interest rate on Magic Moose's debt is 13%. Un conditions, it is reasonable to expect that Magic Moose will generate a ROE of: O -0.13% -0.11% -0.1% -0.09% Given the ROE-related findings above for both Chilly Moose and Magic Moose, answer the following question: An aggressive bl leverage a firm's expected ROE the probability of a large loss, and consequently he risk borne by the firm's stockholders. A conservative 's chance of bankruptcy, the its optimal debt ratio will be. manager is more likely to use debt in an effort to boost profits. Given the ROE-related findings above for both Chilly Moose and Magic Moose, answer the following question: The use of financial leverage the risk borne by the firm's st higher pected ROE lower rs the probability of a large lc The greater a firm's chance of bankruptcy, the its optimal debt ratio will be. w manager is more likely to use debt in an effort to boost profits