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The impact of financial leverage on return on equity and earnings per share Consider the following case of Free Spirit Industries Inc.: Suppose Free Spirit Industries 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 15,000 shares. The company incurs a tax rate of 35%. . If the project is financed using 100% equity capital, then Free Spirit Industries Inc.'s return on equity (ROE) on the In addition, Free Spirit's earnings per share (EPS) will be project will bel 14.63% 16.25% 13.00% | Alternatively,"| 17.06% dustries Inc.'s CFO is also considering financing the project with 50% debt and 50%