Assume That a Firm Has a Degree of Financial Leverage

question 21

Multiple Choice

Assume that a firm has a degree of financial leverage of 1.25.If sales increase by 20%,the firm will experience a 60% increase in EPS,and it will have an EBIT of $100,000.What will be the EBIT for this firm if sales do not increase? Do not round intermediate calculations.

• A) $64,189
• B) $77,703
• C) $67,568
• D) $54,054
• E) $68,243

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Definitions:

Selective Pressures

Environmental or societal factors that influence the survivability and reproductive success of organisms, thereby affecting evolutionary change.

Evolved Sex Differences

Refer to the biological and psychological differences between males and females that are believed to have developed through the process of evolution to adapt to specific environmental challenges.

Empirical

Pertaining to or based on observation or experience rather than theory or pure logic.

Investigate

the action of carrying out research or systematic inquiry to discover facts or information about a subject, often involving the collection of evidence.