The EBIT-EPS Indifference Point

question 25

Multiple Choice

The EBIT-EPS indifference point

• A) identifies the EBIT level at which the EPS will be the same regardless of the financing plan.
• B) identifies the point at which the analysis can use EBIT and EPS interchangeably.
• C) identifies the level of earnings at which the management is indifferent about the payments of dividends.
• D) none of the above.

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Definitions:

Operant Conditioning

A training procedure by which behavior intensity is changed through reinforcement or punishment.

Modeling

A technique in psychotherapy where individuals learn by observing and imitating the behaviors of others.

Reinforcement

The process of encouraging or establishing a pattern of behavior by offering reward or punishment.

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior, through which an association is made between a behavior and a consequence for that behavior.