(Leverage and EPS) You have developed the following pro forma income statement for your corporation: . It represents the most recent year's operations, which ended yesterday. Your supervisor in the controller's office has just handed you a memorandum asking for written responses to the following questions: a. If sales should increase by 25 percent, by what percent would earnings before interest and taxes and net income increase? b. If sales should decrease by 25 percent, by what percent would earnings before interest and taxes and net income decrease? c. If the firm were to reduce its reliance on debt financing such that interest expense were cut in half, how would this affect your answers to parts a and b? X Data table Sales $ 45,801,000 (22,828,000) Variable costs Revenue before fixed costs 22,973,000 (9,283,000) Fixed costs EBIT 13,690,000 (1,351,000) Interest expense Earnings before taxes $ 12,339,000 (6,169,500) Taxes (50%) 6,169,500 Net income Print Done (Leverage and EPS) You have developed the following pro forma income statement for your corporation: . It represents the most recent year's operations, which ended yesterday. Your supervisor in the controller's office has just handed you a memorandum asking for written responses to the following questions: a. If sales should increase by 25 percent, by what percent would earnings before interest and taxes and net income increase? b. If sales should decrease by 25 percent, by what percent would earnings before interest and taxes and net income decrease? c. If the firm were to reduce its reliance on debt financing such that interest expense were cut in half, how would this affect your answers to parts a and b? X Data table Sales $ 45,801,000 (22,828,000) Variable costs Revenue before fixed costs 22,973,000 (9,283,000) Fixed costs EBIT 13,690,000 (1,351,000) Interest expense Earnings before taxes $ 12,339,000 (6,169,500) Taxes (50%) 6,169,500 Net income Print Done