Alpha Beta Corporation maintains a constant debt$-$equity ratio of $0\mathrm{.}5.$ The total value of the firm is

$$30$ million, and existing debt is riskless. Over the next three months, news will come out that will

either raise or lower Alpha Beta's value by $10\%.$ How will Alpha Beta adjust its debt level in

response to keep its debt$-$equity ratio constant?

A$)$ Either increase by $$1$ million or decrease by $$1$ million.

B$)$ Either increase by $$1\mathrm{.}5$ million or decrease by $$1\mathrm{.}5$ million.

C$)$ Either increase by $$3$ million or decrease by $$3$ million.

D$)$ There will be no change $-$ the debt$-$equity ratio will remain constant.

Answer: A

How did they get A