The impact of financial leverage on return on equity and earnings per share Consider the following case of Purple Panda Importers: Suppose Purple Panda Importers is considering a project that will require $300,000 in assets. The project is expected to produce earnings before interest and taxes (EBIT) of $55,000. Common equity outstanding will be 30,000 shares. The company incurs a tax rate of 40%. If the project is financed using 100% equity capital, then Purple Panda Importers' return on equity (ROE) on the project will be _____. In addition, Purple Panda's earnings per share (EPS) will be _____.