An EPS-Operating Income Graph Shows the Trade-Off Between Financing Plans

question 55

Multiple Choice

An EPS-Operating Income graph shows the trade-off between financing plans and:
I. Greater risk associated with debt financing, which is evidenced by the greater slope II) Their break-even point
III. The minimum earnings needed to pay the debt financing for a given level of debt

• A) I only
• B) II only
• C) III only
• D) I, II, and III only

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