Arrow Technology, Inc. (ATI) has total assets of 10 million and expected operating income (EBIT) of $2.5 million. If ATI uses debt in its capital structure, the cost of this debt will be 12 percent per annum. Leverage Ratio 0% (Debt/Total Assets) 25% 50% Total assets Debt (at 12% interest) Equity Total liabilities and equity Expected operating income (EBIT) Less interest (at 12%) Earnings before tax Less: Income tax at 40% Earnings after tax Return on equity Effect of a 20% Decrease in EBIT to $2,000,000 Expected operating income (EBIT) Less: Interest (at 12%) Earnings before tax Less: Income tax at 40% Earnings after tax Return on equity Effect of a 20% Increase in EBIT to $3,000,000 Expected operating income (EBIT) Less: interest (at 12%) Earnings before tax Less: Income tax at 40% Earnings after tax Return on equity b. Determine the percentage change in return on equity of a 20 percent decrease in expected EBIT from a base level of $2.5 million with a debt-to-total-assets ratio of i.0% ii.25% iii.50% c. Determine the percentage change in return on equity of a 20 percent increase in expected EBIT from a base level of $2.5 million with a debt-to-total-assets ratio of i.0% ii. 25% iii.50% d. Which leverage ratio yields the highest expected return on equity? e. Which leverage ratio yields the highest variability (risk) in expected return on equity