MIND TAP Assignment 13. Capitalstructure and Leverage Activity Information Due on May 7 at 11 PM coT Keep the Highest: 3, The effect of financial leverage on ROE companies that use debt in their capital structure are sa to be using financial leverage. using leverage can inaease shareholder retums, but leverage also inaeasesthe risk that shareholders bear. consider the following case: water and power co is considering a project that wil require ss50,00oin assets. The project wil be financed with 100% equity- The company faces a tax rate of 30%. what wil be the ROE creturn on equity) for this project ifit produces an EBIT (eamings before interest and taxes) of s155,000? Q 13.8% Q 16.7% Q 19.7% Q 15.8% Determine what the project's Roe will be if its EBIT is -s60,000 whencalculating the taxeffects, assume that water and Power Co. as a whole will have a large, postive income this year. O -6.8% water and Power co. is also considering financing the project with son equity and son% debt. The interest rate on the company's debt wil be 13w. what wil be the project'sRoE ifit produces an EBIT of $155,000? 304% 21.3% O 31.9%. Q 22.8% what will be the project's ROE if it produces an EBIT of -$60,000 and it finances so% of the project with equity and sosi with debt? when calculating the tax effects, assume that water and Povrer Co. as a whole wil have a large, positive income this year. 25.6 MacB