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A company has a Leverage Ratio of 2. What is the proportion between Debt and...

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Finance

A company has a Leverage Ratio of 2. What is the proportion between Debt and Equity of new funds to keep the ratio flat?

Leverage = 1 + (D/E)

a. Debt must double the Equity value

b. Debt must be half of the Equity value

c. Equity and Debt must be added in equal amount.

d. Since the Leverage is already established whatever proportion of Debt or Equity added will not affect the ratio.

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