Z Corp. currently borrows $1,000,000 and buys back its shares? In general, which of the following would be the consequences?

I) Increases the debt/ equity ratio and the debt ratio

II) Decreases the Equity multiplier

III) Possibly increase the risk of financial distress due to increased debt, if the economy goes into recession

IV) Possibly increase the return on equity(ROE) if the economy is expanding

V) Possibly increases the Earnings per share (EPS) if the economy is expanding

A) I only

B) II and III only

C) I, III. IV. And V

D) II only

E) IV only