Question 7 (Mandatory) (0.6 points) A firm faces a 30 percent tax rate and has $500m in assets, currently financed entirely with equity. Equity is worth $100 per share, and book value of equity is equal to market value of equity. Also, let's assume that the firm's expected EBIT is $70m. The firm is considering switching to an 18 percent debt capital structure, and has determined that they would have to pay an 8 percent yield on perpetual debt. How much will ROE change if they switch to the proposed capital structure? O The ROE will increase by 0.92 percent O The ROE will increase by 1.58 percent O The ROE will decrease by 0.52 percent There will be no change in the firm's ROE Question 8 (Mandatory) (0.6 points) An all-equity financed firm has $450 in assets and the stock price is $45. If the firm restructures with 20 percent del which creates interest expense of $10 per year and the firm's tax rate is 40 percent, what is the break even EBIT? O $50 O $45 $35 $30