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  3. 2 assume that you have found galloway inc. is unde

2 Assume that you have found Galloway Inc. is under levered, with an actual debt...

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Accounting

2 Assume that you have found Galloway Inc. is under levered, with an actual debt ratio of 10% and an optimal debt ratio of 30%. Galloway is a mid-cap company that pays substantial dividends. The stock has relatively high insider holdings (as a percent of the outstanding stock). Which of the following would you recommend that the company do?

a. Borrow money gradually over time and pay higher dividends

b. Borrow money gradually over time and take projects

c. Borrow money gradually over time and buy back stock

d. Lack of information, cannot decide if it should take projects.

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