If the cost of borrowing is lower than the operating return .. business by increasing borrowing in its capital structure a. no change in the return on equity b. Increase the return on equity c. Reduction in the return on equity d. Change in the return on equity in an indefinite manner e. none

If the cost of borrowing is lower than the operating return .. business by increasing borrowing in its capital structure a. no change in the return on equity b. Increase the return on equity c. Reduction in the return on equity d. Change in the return on equity in an indefinite manner e. none

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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If the cost of borrowing is lower than the operating return .. business by increasing borrowing in its capital structure

a. no change in the return on equity

b. Increase the return on equity

c. Reduction in the return on equity

d. Change in the return on equity in an indefinite manner

e. none

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