A Firm Is Expected to Generate $1

question 63

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?

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

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Definitions:

Robert Frank

An American economist known for his work in the areas of microeconomics and behavioral economics, particularly relating to consumer behavior and the economics of well-being.

Chief Executive Officers

Top executives in charge of managing an organization's overall operations and making major corporate decisions.

Production Worker

An employee engaged in manufacturing goods or operating machinery in a production process.

Income Rises

An increase in the amount of money earned by an individual or household over a period.