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n an EPS-EBI graphical relationship, why A firm s capital structurethe debt line have a lower vertical intercept point than the no debt line? Multiple

n an EPS-EBI graphical relationship, why A firm s capital structurethe debt line have a lower vertical intercept point than the no debt line?

Multiple Choice

  • The debt line has a negative slope while the no debt line has a positive slope.

  • The break-even point is higher with debt.

  • The debt line is horizontal while the no debt line has a positive slope.

  • With debt, a fixed interest charge is paid out of earnings.

  • The debt line has less of a slope than the no debt line.

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