The Effect of Financial Leverage			Interest rate 5%
Complete the table by filling out the yellow cells			Tax rate 40%
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	No leverage		Leverage
Total capital	$10,000,000		$10,000,000
Debt	0		$4,000,000
Equity	$10,000,000		$6,000,000
Shares ($20)
Price per share	$ 20.00		$ 20.00
EBIT	$500,000		$500,000
Interest
EBT
Tax (40%)
Net Income
EPS
Tax savings
Interest tax shield
EBIT	$750,000		$750,000
Interest
EBT
Tax (40%)
Net Income
EPS
Tax savings
Interest tax shield