Question: 12.9. Example 12.9 illustrates how an increase in leverage can affect Micro Technologies price/earnings ratio. If the interest rate on the new debt was 2

12.9. Example 12.9 illustrates how an increase in leverage can affect Micro Technologies’

price/earnings ratio. If the interest rate on the new debt was 2 percent rather than 6 percent, would the firm’s price/earnings ratio increase or decrease?

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