If sales increases by 12 EBIT increases by 16 Net Income increases by 23 Interest expense increases by 12 Calculate DFL A) 1 67 B) 1 44 c) 1 05 D) 1 00 Which of the following statements about leverage is not true A) Leverage can help the firm B) Leverage can hurt the firm C) If EBIT decreases, financial leverage will magnify the change in net income D) Managers that are risk averse are likely to prefer lower amounts of leverage E) All of the above are true Equity is more expensive than debt A) True B) False Your firm has a DOL of 1 05 and an EBIT of $800,000 If sales increase by 20 calculate the percent change in EBIT A) 5 00 B) 12 5 C) 20 00 D) 21 00 If sales increases by 12 EBIT increases by 16 Net Income increases by 23 Interest expense increases by 12 Calculate DFL A) 1 67 B) 1 44 c) 1 05 D) 1 00 Which of the following statements about leverage is not true A) Leverage can help the firm B) Leverage can hurt the firm C) If EBIT decreases, financial leverage will magnify the change in net income D) Managers that are risk averse are likely to prefer lower amounts of leverage E) All of the above are true Equity is more expensive than debt A) True B) False Your firm has a DOL of 1 05 and an EBIT of $800,000 If sales increase by 20 calculate the percent change in EBIT A) 5 00 B) 12 5 C) 20 00 D) 21 00

Question

If sales increases by 12  EBIT increases by 16  Net Income increases by 23  Interest expense increases by 12  Calculate DFL  A) 1 67 B) 1 44 c) 1 05 D) 1 00 Which of the following statements about leverage is not true  A) Leverage can help the firm B) Leverage can hurt the firm C) If EBIT decreases, financial leverage will magnify the change in net income D) Managers that are risk averse are likely to prefer lower amounts of leverage E) All of the above are true Equity is more expensive than debt  A) True B) False  Your firm has a DOL of 1 05 and an EBIT of $800,000  If sales increase by 20   calculate the percent change in EBIT  A) 5 00  B) 12 5  C) 20 00  D) 21 00  If sales increases by 12  EBIT increases by 16  Net Income increases by 23  Interest expense increases by 12  Calculate DFL  A) 1 67 B) 1 44 c) 1 05 D) 1 00 Which of the following statements about leverage is not true  A) Leverage can help the firm B) Leverage can hurt the firm C) If EBIT decreases, financial leverage will magnify the change in net income D) Managers that are risk averse are likely to prefer lower amounts of leverage E) All of the above are true Equity is more expensive than debt  A) True B) False  Your firm has a DOL of 1 05 and an EBIT of $800,000  If sales increase by 20   calculate the percent change in EBIT  A) 5 00  B) 12 5  C) 20 00  D) 21 00

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If sales increases by 12% EBIT increases by 16% Net Income increases by 23% Interest expense increases by 12% Calculate DFL. A) 1.67 B) 1.44

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