2. Bow Technology, Inc. (BTI) has total assets of S20 million. If BTI finances 25 percent of its total assets with debt capital the pretax cost of funds is 4 percent. If the company finances 50 percent of its total assets with debt capital the pretax cost of funds are 6 percent. a. Assume expected operating income (EBIT) is $3.0 million. Given this, complete the following table: Debt Ratio (Debt/Total Assets) 25% 50% Equity EBIT 3.0 3. 3.2 Less: Interest Earnings before taxes Less: Taxes (at 30%) Earnings after taxes Return on equity DFL b. Assume expected operating income (EBIT) decreases to $2.5 million. Given this, complete the following table, ineluding the percentage change in ROE from part a: EBIT Less: Interest Earnings before taxes Less: Taxes (at 30%) Earnings after taxes Return on equity DEL y change in ROE c. Which debt ratio has the greatest financial risk? Why