A Firm Is Expected to Generate $1

question 108

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

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Definitions:

Rationalization

A defense mechanism where individuals justify their actions or decisions with plausible but not the real reasons to avoid facing the true underlying motives.

Projection

A defense mechanism where an individual attributes their own unacceptable thoughts, feelings, or motives to another person.

Repression

A defense mechanism where unpleasant thoughts or desires are unconsciously excluded from consciousness.

Blocking Feelings

An emotional defense mechanism where an individual unconsciously or consciously avoids experiencing or expressing certain emotions.