Use the Information for the Question(s)below

question 31

Multiple Choice

Use the information for the question(s) below.
Fly by Night Aviation (FBNA) expects to have net income next year of $24 million and interest expense of $3 million.FBNA's corporate tax rate is 21%.
-IF FBNA increases leverage so that its interest expense rises by $1 million,then the amount its net income will change is closest to:

• A)-$400,000.
• B)-$600,000.
• C)$400,000.
• D)$600,000.

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Definitions:

Agency

A relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principal).

Improbable

Unlikely to occur or be true.

Estopped

Estopped refers to a legal principle that prevents a person from arguing something contrary to a claim they previously made or agreed to by their actions or words.

Requisite Authority

The necessary or required power, permission, or jurisdiction to perform an action or enforce a policy.