Sombra Corp. is a small company and is considering a project that will require $700,000 in assets. The project will be financed with 100% equity. The company faces a tax rate of 25%. What will be the ROE (return on equity) for this project if it produces an EBIT (earnings before interest and taxes) of $140,000?

9.75%

15.75%

15.00%

9.00%

Determine what the projects ROE will be if its EBIT is $40,000. When calculating the tax effects, assume that Sombra Corp. as a whole will have a large, positive income this year.

-4.3%

-3.44%

-3.65%

-4.94%