What will be the project's ROE if it produces an EBIT of -$45,000 and it finances 50% of the project with equity and 50% with debt? When calculating the tax effects, assume that Western Gas & Electric Co. as a whole will have a large, positive income this year. -26.10% -28.27% -21.75% O-22.84% D&M Warehousing currently is financed with 10% debt and 90% equity. However, its CFO has proposed that the firm issue new long-term debt and repurchase some of the firm's common stock. Its advisers believe that the long-term debt would require a before-tax yield of 10%, while the firm's basic earning power is 14%. The firm's operating income and total assets will not be affected. The CFO has told the rest of the management team that he believes this move will increase the firm's stock price. If D&M Warehousing proceeds with the recapitalization, which of the following items are also likely to increase? Check all that apply. Basic earning power (BEP) Cost of equity (Is) Return on assets (ROA) Net income Cost of debt (10) What will be the project's ROE if it produces an EBIT of -$45,000 and it finances 50% of the project with equity and 50% with debt? When calculating the tax effects, assume that Western Gas & Electric Co. as a whole will have a large, positive income this year. -26.10% -28.27% -21.75% O-22.84% D&M Warehousing currently is financed with 10% debt and 90% equity. However, its CFO has proposed that the firm issue new long-term debt and repurchase some of the firm's common stock. Its advisers believe that the long-term debt would require a before-tax yield of 10%, while the firm's basic earning power is 14%. The firm's operating income and total assets will not be affected. The CFO has told the rest of the management team that he believes this move will increase the firm's stock price. If D&M Warehousing proceeds with the recapitalization, which of the following items are also likely to increase? Check all that apply. Basic earning power (BEP) Cost of equity (Is) Return on assets (ROA) Net income Cost of debt