What will be the project's ROE if it produces an EBIT of -$40,000 and it finances 50% of the project with equity and 50% with debt? When calculating the tax effects, assume that Osato Chemicals Inc. as a whole will have a large, positive income this year. O -16.87% 0 -16.07% 0 -20.89% 0 -17.68% the The use of financial leverage the expected ROE, risk borne by stockholders. The greater the firm's chance of bankruptcy, the is more likely to use debt in an effort to boost profits. the probability of a large loss, and consequently its optimal debt ratio will be. manager Search 11:38 AM Sat Dec 5 7519