Manchu Company Had Net Income of $140,000 and Interest Expense

question 63

Multiple Choice

Manchu company had net income of $140,000 and interest expense of $30,000. If the corporate tax rate was 30%, determine its Degree of Financial Leverage (DFL) .

• A) 1.00
• B) 1.05
• C) 1.10
• D) 1.15
• E) 1.20

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Definitions:

Psychoanalytic

Pertaining to a theory of mental illness and therapy developed by Sigmund Freud that emphasizes unconscious psychological processes and stresses the importance of childhood experiences.

Cognitive-Behavioral Therapist

A mental health professional specializing in cognitive-behavioral therapy (CBT), which focuses on changing negative thought patterns to improve behavior and emotional regulation.

Electroconvulsive Treatments

A psychiatric treatment where seizures are electrically induced in patients to provide relief from mental disorders.

Positive Activities

Engagements or tasks that induce positive emotions, enhance well-being, and contribute to personal or group fulfillment, often used in therapeutic contexts to improve mental health.