5. Business and financial risk Aa Aa The impact of financial leverage on return on equity and earnings per share Consider the following case of Green Rabbit Transportation Inc.: Suppose Green Rabbit Transportation Inc. is considering a project that will require $200,000 in assets. The project is expected to produce earnings before interest and taxes (EBIT) of $50,000. Common equity outstanding will be 30,000 shares. The company incurs a tax rate of 30%. If the project is financed using 100% equity capital, then Green Rabbit Transportation Inc.'s return on equity (ROE) on the project will be In addition, Green Rabbit's earnings per share (EPS) will be 14.00% 20.13% 17.50% Alternatively, Green 21.00% ortation Inc.'s CFO is also considering financing the project with 50% debt and