Question $31$

$2\mathrm{.}7$ pts

Here is the following scenario for a $1$ year investment: $D$

Pirchase stocke $$100$

Equity imested $590$

Debt $$20$

Interest Pimments: $$2(10$S interest$)$

Sales price after $1$ year: $$150$

If the leverage ratio were to increase would the rate of return for the year increase or decrease? Why?

Increwic livcreaing leverage angdfen reburn tecaune the devorinator in the rabe of rebuen cakudation is shriving

Incensie; Decreaing leverape anyifes retums becane the denoninutar in the rate of retum calcuarion is thinaing

calculation is striving

Ivoreme incremine leverage anplites meturs becaune the devorinatar in the rate of return calciation is erowing