A Firm Has a Current Capital Structure Consisting of $400,000

question 197

Multiple Choice

A firm has a current capital structure consisting of $400,000 of 6 percent annual interest debt and 50,000 shares of common stock.The firm's tax rate is 21 percent on ordinary income.If the EBIT is expected to be $200,000,two EBIT-EPS coordinates for the firm's existing capital structure are ________.

• A)($24,000,$0)and ($200,000,$0.74)
• B)($24,000,$0)and ($200,000,$2.78)
• C)($0,$24,000)and ($200,000,$1.82)
• D)($24,000,$0)and ($200,000,$3.52)

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Definitions:

Cocaine

A powerful stimulant drug derived from the leaves of the coca plant that affects the central nervous system, leading to increased energy and euphoria.

Opiates

A group of drugs derived from opium that are used for their analgesic (pain-relieving) properties but are also highly addictive.

Lethal

Capable of causing death or serious harm.

Drug Addiction

A chronic disorder characterized by compulsive drug seeking, continued use despite harmful consequences, and long-lasting changes in the brain.