When Using an EPS-EBIT Chart to Evaluate a Pure Debt

question 113

Multiple Choice

When using an EPS-EBIT chart to evaluate a pure debt financing and pure equity financing plan, the debt financing plan line will have

• A) a steeper slope than the equity financing plan line.
• B) a slower rate of change as EBIT increases.
• C) a downward slope.
• D) the same slope as the equity plan, but a higher intercept.

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