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2. Business and financlal risk The impact of tinancial leverage on return on equiry atud earnings per share Consader the following case of Happy Turtie Transportation Company: Sunpose Happy Turtle Transportation Company is considering a project that will require 5300,000 in assets. - The project is expected to produce earrungs before interest and taxes (EBIT) of $40,000. - Comenan equity outstanding will be 10,000 sthares. - The compary incurs a tax rate of jowh. If the project is financed using 1009 b equity copital, then Happy Turtle Transportation Company's return on equity (RoE) on the project will be In addition. Hagpy Turtle's earnings per share (EPS) will be Alternatively, Happy Tiantle Transportation Company's CFO is also considering financing the project with 50% debt and 50% equity capital. The interest rate on the cocipary's debt will be 11%. Because the company will finance only 50% of the project with equity. it will have only 5 , 000 shares outstanding. Happy Turtle Transpioctation Coctyany's ROE and the company's EPS will be. if manapevtiert decoes to finance the project with sofs debe and 50% equity. Typically. using financial tercerage will a project's expected ROE