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Sylvan Corporation has the following capital structure. Debenture bonds: $10,000,000 Preferred equity: $1,000,000 Common equity: $39,000,000 The financial leverage of Sylvan Corporation would increase as a result of
A. Issuing common stock and using the proceeds to retire preferred stock. B. Maintaining the same dollar level of cash dividends as the prior year, even though earnings have increased by 7%. C. Financing its future investments with a higher percentage of equity funds. D. Financing its future investments with a higher percentage of bonds.
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