Coats Corp

question 7

Multiple Choice

Coats Corp. generates $10,000,000 in sales. Its variable costs equal 85% of sales and its fixed costs are $500,000. Therefore, the company's operating income (EBIT) equals $1,000,000. The company estimates that if its sales were to increase 10%, its net income and EPS would increase 17.5%. What is the company's interest expense?

• A) $150,000
• B) $142,857
• C) $128,929
• D) $135,714
• E) $122,482

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