<p>This study examines the impact of debt financing decisions on return on equity (ROE) in vessel acquisitions. Shipowning companies rely heavily on debt capital to finance vessel purchases, even when sufficient equity is available, due to the benefits of financial leverage. To support decision-making, this study derives a formula that models ROE as a function of debt ratio, cost of debt, and debt tenure. The study reveals that ROE exhibits saddle points depending on specific combinations of cost and duration of debt. These points indicate that the application of debt capital will boost ROE up to certain project-specific inflection points related to combinations of cost of debt and debt tenure. Beyond these inflection points, the application of debt capital lowers ROE. These findings contribute to the interdisciplinary literature on corporate finance and maritime transportation. The study also provides financial managers with a formula to evaluate the effect of debt capital structure on the ROE of vessel acquisition projects. Ultimately, the study supports informed debt financing decision-making in the shipping industry.</p>