If the interest rate on debt is higher than ROA,then a firm will __________ by increasing the use of debt in the capital structure.

Name: If the interest rate on debt is higher than ROA,then a firm will __________ by increasing the use of debt in the capital structure.
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Question

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When the interest rate on debt is higher than the return on assets (ROA), the cost of debt exceeds the returns generated by the assets, leading to a decrease in return on equity (ROE) as more debt is used.

If the Interest Rate on Debt Is Higher Than ROA,then