When Comparing Levered Versus Unlevered Capital Structures,leverage Works to Increase

question 34

Multiple Choice

When comparing levered versus unlevered capital structures,leverage works to increase EPS for high levels of EBIT because interest payments on the debt:

• A)vary with EBIT levels.
• B)stay fixed,leaving more income to be distributed over fewer shares.
• C)stay fixed,leaving less income to be distributed over fewer shares.
• D)stay fixed,leaving less income to be distributed over more shares.
• E)stay fixed,leaving more income to be distributed over more shares.

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Definitions:

November

The 11th month in the Gregorian calendar system.

Cash Collections

The process of gathering and processing payments received from customers, especially in terms of accounts receivable management.

Cash Disbursements

Payments made by a business in the form of cash or cash equivalents.

December

The last month of the year according to the Gregorian calendar, which is the twelfth one.