Which of the following statements is correct? Provided a firm’s investments exceed the firm’s rate of borrowing, with additional leverage

a. The firm’s income available for its shareholders collectively will decrease.

b. The income available per shareholder will increase.

c. Statement a but not Statement b is correct.

d. Both Statements a and b are correct.

Hint: Answer a itself is correct on account of that an additional portion of the firm’s income must now be allocated to debt repayment.