Question
A corporation reports sales of $4,000,000, variable costs of $500,000, fixed operating costs of $1,250,000, and interest expense of $350,000. The corporation's EBIT is $2,250,000
A corporation reports sales of $4,000,000, variable costs of $500,000, fixed operating costs of $1,250,000, and interest expense of $350,000. The corporation's EBIT is $2,250,000 and its marginal tax rate is 30%. If the corporation is able to increase its sales by 25%, then
| A) its EBIT will increase by 25% and its EPS will increase by 25%. | ||
| B) | its EBIT will increase by more than 25% and its EPS will increase by less than 25%. | |
| C) its EBIT and EPS will both increase, but less than 25% due to fixed costs and taxes. | ||
| D) | its EBIT will increase by more than 25% and its EPS will increase by more than the percentage increase in EBIT. |
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Handbook Of Energy Finance Theories Practices And Simulations
Authors: Stéphane Goutte, Duc Khuong Nguyen
1st Edition
9813278374, 978-9813278370
