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Galt industries has a market capitalization of $1.25 billion and $750 million in debt outstanding. Galt Industries has decided to reduce the firm's leverage by

Galt industries has a market capitalization of $1.25 billion and $750 million in debt outstanding. Galt Industries has decided to reduce the firm's leverage by issuing new equity and completely repaying all the outstanding debt. Assume perfect capital markets, this decision would ___ firm value and ___ the return on equity

A Increase, decrease

B Not affect, increase

C Decrease, increase

D Not affect, decrease

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