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How the return on equity as leverage increase

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Reference no: EM132543299

Question 1: If the rate of return earned before the payment of interest and taxes is greater than the interest on debt, then the return on equity______ as leverage increases.

OPTIONS:-

Option 1: INCREASES

Option 2: DECREASES

Option 3: REMAIN SAME

Option 4: CANNOT BE DETERMINED

Reference no: EM132543299

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