Return on equity will not change if the firm increases its use of debt. TRUE OR FALSE?

Return on equity will not change if the firm increases its use of debt. TRUE OR FALSE???Return on equity will not change if the firm increases its use of debt. TRUE OR FALSE?
While it's true, as responder 1 has stated, that the two are not necessarily related, it's also true that investors will value a company with debt differently than a company sitting on cash. There will be a perceived relationship by the investing public. An accountant might answer this question true, whereas an investor with an understanding of the marketplace would answer false.Return on equity will not change if the firm increases its use of debt. TRUE OR FALSE?
Since return on equity is (earnings per share) / (book value) it should change by increased use of debt. Debt is leverage and should (if used effectively) increase the earnings a company makes without changing book value.
true.





Here's my reason....let me know if you agree.





The value of my house does not change if I continue to use my credit card....one does not affect the other.

hardware