what will be the project's ROE if it produces an EBIT of-$60,000 and it finances 50% of the project with equity and 50% with debt? when calculating the tax effects, assume that Three Waters Co. as a whole will have a large, positive income this year. 0-27.3% O-26.3% 0-242% 0-21.090 The use of financial leverage consequently the expected ROE, the probability of a large loss, and the risk borne by stockholders. The greater the firm's chance of bankruptcy, the its optimal debt ratio will be. manager is more likely to use debt in an effort to boost profits