the interest rate on debt is lower than ROA, then a firm will __________ by increasing the use of debt in the capital structure. a. increase the ROE b. not change the ROE c. decrease the ROE d. change the ROE in an indeterminable manner e. none of the above

the interest rate on debt is lower than ROA, then a firm will __________ by increasing the use of debt in the capital structure. a. increase the ROE b. not change the ROE c. decrease the ROE d. change the ROE in an indeterminable manner e. none of the above

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

3.If the interest rate on debt is lower than ROA, then a firm will __________ by increasing the use
of debt in the capital structure.

a. increase the ROE
b. not change the ROE
c. decrease the ROE
d. change the ROE in an indeterminable manner e. none of the above

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