A Firm Has Interest Expense of $145,000, Preferred Dividends of $25,000

question 141

Multiple Choice

A firm has interest expense of $145,000, preferred dividends of $25,000, and a tax rate of 40 percent.The firm's financial break-even point is _________.

• A) $186,667
• B) $ 25,000
• C) $170,000
• D) $145,000

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Definitions:

Prices

The monetary value assigned to goods, services, or assets in a market, which can be influenced by supply and demand dynamics, production costs, and external market conditions.

Exercise Price

The cost that an option holder is allowed to pay to acquire (if it's a call option) or dispose of (if it's a put option) the base security or commodity.

Underlying Asset's Price

The current market price of the security or commodity that is the basis for a derivative contract, such as options or futures.

Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a certain date.