When Comparing Levered Vs

question 84

Multiple Choice

When comparing levered vs. unlevered capital structures,leverage works to increase EPS for high levels of EBIT because:

• A) interest payments on the debt vary with EBIT levels.
• B) interest payments on the debt stay fixed, leaving less income to be distributed over less shares.
• C) interest payments on the debt stay fixed, leaving more income to be distributed over less shares.
• D) interest payments on the debt stay fixed, leaving less income to be distributed over more shares.
• E) interest payments on the debt stay fixed, leaving more income to be distributed over more shares.

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