Economics · Financial Leverage
An increase in financial leverage will increase earnings per share (EPS) provided that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Cost of equity is greater than return on investment
- 2Return on investment exceeds the cost of debt✓
- 3Fixed costs are reduced proportionately
- 4Sales revenue remains constant
Correct answer
Return on investment exceeds the cost of debt
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