What effect would expect the new leverage policy

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Question 1: This year Baldwin achieved an ROE of 3.2%. Suppose the Board of Directors of Baldwin mandates that management take measures to increase financial Leverage (=Assets/Equity) next year. Assuming Sales, Profits, and Assets remain the same next year, what effect would you expect this new Leverage policy will have on Baldwin ROE?

A) Baldwin ROE will increase

B) Baldwin ROE will will remain the same

C) Baldwin ROE will decrease

Attachment:- ROE.zip

Reference no: EM132489679

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