2. Bow Technology, Inc. (BTI) has total assets of $30 million. If BTI finances 25 percent of its total assets with debt capital the pretax cost of funds is 6 percent. If the company finances 50 percent of its total assets with debt capital the pretax cost of funds are 8 percent. a. Assume expected operating income (EBIT) is $4.0 million. Given this complete the following table: Debt Ratio (Debt/Total Assets) 0% 25% 50% Equity EBIT Less: Interest Earnings before taxes Less: Taxes (at 20%) Earnings after taxes Return on equity DFL b. Assume expected operating income (EBIT) decreases to $3.0 million. Given this, complete the following table, including the percentage change in ROE from part a: EBIT Less: Interest Earnings before taxes Less: Taxes (at 20%) Earnings after taxes Return on equity DFL change in ROK e. Which debt ratio has the greatest financial risk? Why