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A company is considering a switch from an all-equity capital structure to a structure with equal amounts of equity and debt without increasing assets. This
A company is considering a switch from an all-equity capital structure to a structure with equal amounts of equity and debt without increasing assets. This change will reduce the net income by 30%. If the current return on equity (ROE) is 10%, the ROE under the proposed capital structure will be closest to:
A. 6%.
B. 20%.
C. 14%.
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