If Debt Financing Is Used, Which of the Following Is

question 40

Multiple Choice

If debt financing is used, which of the following is CORRECT?

• A) The percentage change in net operating income will be greater than a given percentage change in net income.
• B) The percentage change in net operating income will be equal to a given percentage change in net income.
• C) The percentage change in net income relative to the percentage change in net operating income will depend on the interest rate charged on debt.
• D) The percentage change in net income will be greater than the percentage change in net operating income.
• E) The percentage change in sales will be greater than the percentage change in EBIT, which in turn will be greater than the percentage change in net income.

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