All Else Equal, the Use of Debt Will

question 19

Multiple Choice

All else equal, the use of debt will

• A)result in both a lower earnings per share and a lower P/E ratio.
• B)result in a lower earnings per share and, thus, a higher P/E ratio.
• C)result in a higher earnings per share and, thus, a lower P/E ratio.
• D)None of the above is a true statement.