A Firm Is Expected to Generate $1

question 94

Multiple Choice

A firm is expected to generate $1.5 million in operating income and pay $250,000 in interest.Ignoring taxes, this will generate $12.50 earnings per share.What will happen to EPS if operating income increases to $2.0 million?(use the values in dollar)

• A)EPS will increase to $15.63.
• B)EPS will increase to $16.67.
• C)EPS will increase to $17.50.
• D)EPS will increase to $20.00.

---

Definitions:

CEO

Chief Executive Officer, the highest-ranking individual in a company or organization, responsible for making major corporate decisions.

Chairman

The presiding officer or leader of an organized group, such as a board, committee, or meeting.

Secretary

An administrative position responsible for managing correspondence, keeping records, and performing general office tasks.

Control

The power to influence or direct people's behavior or the course of events.