Explain how each of the following changes will affect Scotts Miracle- Gro's range of earnings chart, Figure 6.2. Which changes would make the leveraged recap more attractive, which less attractive?

a. An increase in the interest rate on debt.

b. An increase in Scotts's stock price.

c. Increased uncertainty about Scotts's future earnings.

d. Increased common stock dividends.

e. An increase in the amount of debt Scotts already has outstanding.

AppendixLO1