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You are the CFO of an all-equity financed firm. Now, you are evaluating a capital restructuring plan to issue some debt and use the proceeds

You are the CFO of an all-equity financed firm. Now, you are evaluating a capital restructuring

plan to issue some debt and use the proceeds to repurchase some shares. How will the earnings per

share (EPS) change with respective to the leverage change? In what circumstances, increasing

leverage will be beneficial for shareholders? In what circumstances, increasing leverage will hurt

shareholders?

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