Suppose an investor is unhappy with River Cruises' decision to borrow $250,000. What modifications can she make to her own investment portfolio to offset the effects of the firm's additional borrowing?

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Data Number of shares 50,000 Price per share $10 Market value of shares $500,000 Market value of debt $500,000 Slump Normal Boom Operating income $75,000 125,00o 175,000 $50,000 50,o00 Interest 50,000 Equity earnings $25,000 75,00o 125,000 Earnings per share $.50 1.50 2.50 Return on shares 15% 25% 5% Expected outcome