Consider Two Companies That Are Alike Except in Borrowing Choices

question 81

Multiple Choice

Consider two companies that are alike except in borrowing choices. District Corp. has no debt financing, and Energy Corp. uses debt financing. The EBIT for both companies is $3,500,000. District Corp. has 400,000 shares outstanding and pays no interest. Energy Corp. has 250,000 shares outstanding and pays $500,000 in interest. What is the EPS for each company?

• A) Both companies have an EPS of $8.75.
• B) Both companies have an EPS of $12.00.
• C) District Corp. has an EPS of $12.00 and Energy Corp. has an EPS of $8.75.
• D) District Corp. has an EPS of $8.75 and Energy Corp. has an EPS of $12.00.

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Definitions:

Semen Ejection

The process by which semen is expelled from the male reproductive tract, generally during ejaculation, as part of the reproductive process.

Low-Ranking Males

Male individuals positioned at the lower end of a social hierarchy, often having less access to resources and mating opportunities.

Reproductive Variance

Differences in reproductive success among individuals within a population, often influencing evolutionary outcomes.

Sexual Dimorphism

The difference in appearance between males and females of the same species, such as differences in size, color, or structure.