Sinclair, Inc. is a levered firm with assets valued at $10,000 and has debt issued at 10% interest. Sinclair pays tax at the rate of 34%. The firm faces EBIT scenarios of recession and boom. {Note: EBIT = earnings before interest and tax, $ Interest = dollar amount of interest owed on the debt, NIBT = net income before tax, NI = net income, EPS = earnings per share}. Assume that firms with zero or negative NIBT pay zero taxes.

..................... EBIT ..... $INTEREST ..... NBIT .... TAXES ........ NI ....... EPS

BOOM .............$900......................................................................................$1.32

RECESSION ...$200 ....................................$550 ...........................................

What amount comes closest to the amount of interest that Sinclair must pay in the BOOM scenario?

	a.	$350
	b.	$750
	c.	$250
	d.	$500
	e.	-$350