Part A. A firm is expected to generate $1.5 million in operating income and pay $250,000 in interest. Ignoring taxes, this will generate $12.50 earnings per share. What will happen to EPS if operating income increases to $2.0 million?

A. EPS increase to $15.63.

B. EPS increase to $16.67.

C. EPS increase to $17.50.

D. EPS increase to $20.00.

Part B. A firm's capital structure is represented by its mix of:

A. assets.

B. liabilities and equity.

C. assets and liabilities.

D. assets, liabilities, and equity.