Financing leverage and earnings growth medium at the bottom


Question: Financing Leverage and Earnings Growth {Medium) At the bottom of Box 14.5 in this chapter there is a formula that shows how leverage affects earnings growth. Apply this formula to explain the increase in the earnings growth rate from 10 percent to 11.67 percent in Year 2 as a result of the increase leverage in the example above it.

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Finance Basics: Financing leverage and earnings growth medium at the bottom
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