An all equity firm with $500 million of total assets, has a basic earning power is 15%. A proposed recapitalization would be to issue debt at a cost of 10% and use the proceeds to buy back shares at book value. With no change in its operating income, total assets, which is most likely to occur due to recapitalization:

Select one:

a. Basic earning power ratio would increase

b. ROE would increase

c. Basic earning power ratio would decline

d. ROA would remain unchanged

e. ROA would increase