In the Dupont Equation, what effect does an increase in a firm's borrowing costs (i.e., a higher interest rate) have on its net profit margin?
A)Remain unchanged
B)Decline by a lot with a high interest rate
C)Decline by a little with a low interest rate
D)It will increase

Question

Quizplus · Accepted Answer

An increase in borrowing costs will increase the interest expense, which will reduce the net income and thus the net profit margin.

In the Dupont Equation, What Effect Does an Increase in a Firm's