Assume That a Firm Currently Has EBIT of $2,000,000, a Degree

question 59

Multiple Choice

Assume that a firm currently has EBIT of $2,000,000, a degree of total leverage of 7.5, and a degree of financial leverage of 1.875. If sales decline by 20% next year, then what will be the firm's expected EBIT in one year?

• A) $380,000
• B) $441,000
• C) $400,000
• D) $361,000
• E) $420,000

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Definitions:

Declarative Memories

Declarative memories are memories that can be consciously recalled, such as facts and events, and are considered explicit memory.

Nondeclarative Memories

A type of long-term memory that doesn't require conscious thought to recall, often shown through skills and tasks such as riding a bike or playing an instrument.

Implicit

Implied or understood though not directly expressed; involving attitudes, beliefs, or actions that are not directly observable.

Explicit

Clearly expressed or fully stated in the actual text or speech.