An EPS-Operating Income Graph, Such as Figure 17

question 28

Multiple Choice

An EPS-operating income graph, such as Figure 17.1, shows the

• A)greater risk associated with debt financing, which is evidenced by a greater slope.
• B)the break-even point where EPS of two different debt ratios are equal.
• C)the minimum operating income needed to pay the interest for a given level of debt.
• D)greater risk associated with debt financing, which is evidenced by a greater slope, the break-even point where EPS of two different debt ratios are equal, and the minimum operating income needed to pay the interest for a given level of debt.

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