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URGENT THANK YOU Recapitalization, Debt-to-Equity, and ROE An institutional investor believes that the company he has invested in should increase its leverage to improve the

URGENT THANK YOU
Recapitalization, Debt-to-Equity, and ROE An institutional investor believes that the company he has invested in should increase its leverage to improve the return on its stock. Currently, the investor earns a return of 14% on a $6.6 million investment in the stock. a. What is his debt-to-equity ratio if he borrows $3,600,000 at a 1.8% interest rate and invests it all in the stock? b. What is the return on the portfolio of stock and debt? a. The debt-to-equity ratio after the recapitalization is (Round to two decimal places.) b. The return on the portfolio of stock and debt is %. (Round to two decimal places.)

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