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 This year Andrews achieved an ROE of

 

This year Andrews achieved an ROE of 16.8%. Suppose the Board of Directors of Andrews mandates that management take measures to increase financial Leverage (=Assets/Equity) next year. Assuming Sales, Profits, and Assets remain the same next year, what effect would you expect this new Leverage policy will have on Andrews ROE?

Select: 1

 

Andrews ROE will remain the same.

 

Andrews ROE will increase.

 

Andrews ROE will decrease.

 



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