The Major Shortcoming of the EBIT-EPS Approach to Capital Structure

question 6

Multiple Choice

The major shortcoming of the EBIT-EPS approach to capital structure is that

• A) the technique does not consider the cost of capital.
• B) the technique does not promote the maximization of shareholder wealth.
• C) the technique only considers leverage-related risk.
• D) the technique does not maximize earnings per share.

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