Question: Exercise 7-22 (Static) Financial leverage LO 7-6 A firm Issues long-term debt with an effective Interest rate of 10%, and the proceeds of this debt

Exercise 7-22 (Static) Financial leverage LO 7-6 A firm Issues long-term debt with an effective Interest rate of 10%, and the proceeds of this debt issue can be invested to earn an ROI of 12% Required: What effect will this financial leverage have on the firm's ROE relative to having the same amount of funds Invested by the owners or stockholders? Multiple Choice ROE will be higher using debt. ROE will be higher using equity ROE will remain same

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