A Firm Is Currently Expected to Develop $2 EPS When

question 112

Multiple Choice

A firm is currently expected to develop $2 EPS when operating income equals $4 million and interest expense equals $2 million.How low can operating income drop before EPS is reduced by half, to $1? Ignore taxes.

• A)Operating income drops to $3.5 million
• B)Operating income drops to $3.0 million
• C)Operating income drops to $2.5 million
• D)Operating income drops to $2.0 million

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