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Item Base Sales Sales $500,000 Less: Total variable costs 200,000 Revenue before fixed costs $300,000 Less: Total fixed costs 180,000 EBIT $ 120,000 Less: Interest

Item

Base Sales

Sales

$500,000

Less: Total variable costs

200,000

Revenue before fixed costs

$300,000

Less: Total fixed costs

180,000

EBIT

$ 120,000

Less: Interest expense

$50,000

Earnings before taxes (EBT)

$70,000

Less: Taxes at 50%

$35,000

Net income

$35,000

Less: Preferred dividends

0

Earnings available to common shareholders (EAC)

$35,000

Number of common shares

10,500

Earnings per share (EPS)

$3.33

Given the information above, what would be the EPS if sales increased by a 20% ?

$5.92

$6.07

$5.25

$6.19

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