Question
A firm has a $5,000,000 in capital and 60% of that is in equity. It has an interest rate of 8% on debt and has
A firm has a $5,000,000 in capital and 60% of that is in equity. It has an interest rate of 8% on debt and has $565,000 in EBIT and $65,000 in fixed costs. Its EPS is $0.54 and they expect a 35% increase in sales. Based on the firm's degree to total leverage, what will be the new EPS be after the change in sales?
$0.83
$1.56
$0.73
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Personal Finance
Authors: Jeff Madura
5th edition
132994348, 978-0132994347
