A Firm Has a Current Capital Structure Consisting of $400,000

question 1

Multiple Choice

A firm has a current capital structure consisting of $400,000 of 12 percent annual interest debt and50,000 shares of common stock. The firm's tax rate is 40 percent on ordinary income. If the EBIT isexpected to be $200,000, two EBIT-EPS coordinates for the firm's existing capital structure are

• A) ($0, $48,000) and ($200,000, $1.82)
• B) ($152,000, $3.50) and ($150,000, $1.82)
• C) ($36,000, $0) and ($200,000, $3.04)
• D) ($48,000, $0) and ($200,000, $1.82)

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Definitions:

Level of Adaptability

The degree to which an individual can adjust their behavior or thinking in response to new, challenging, or changing situations.

Stable Routine

A consistent and predictable schedule of activities that provides structure and stability in daily life.

Independent

Characterized by the ability or condition of having autonomy or self-governance.

Own Interests

The personal or selfish motives and preferences that an individual prioritizes or pursues.