A Firm Currently Has Operating Income of $4 Million,interest Expense

question 32

Multiple Choice

A firm currently has operating income of $4 million,interest expense of $2 million,and EPS of $2.How low can operating income drop before EPS are reduced by half,to $1? Ignore taxes.

• A) $3.5 million
• B) $3.0 million
• C) $2.5 million
• D) $2.0 million

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Definitions:

Sales Volume

The number of units of a product or service sold by a company in a specified period.

Local Dealerships

Businesses authorized to sell and service vehicles from specific manufacturers within a designated geographic area.

Cheapest Product

The item or service offered at the lowest price among a range of products.

Proximity

The state of being close or near in space, time, or relationship.