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Analysis of Scenarios:Debt Scenario would increase the debt ratios from to 50%. Equity Scenario would reduce the debt ratio to 40%. With Debt option, earnings per share would be higher. Interest declines to 2.86 times with the Debt option while times interest earned increases to 3.75 times with the Equity option. Either option exhibits a good use of financial leverage because for both, the financial leverage index being greater than 1. However, it is higher using the Debt
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