The Plastic Corporation has a current capital structure consisting of $150,000 of 15% debt and 3,500 shares
Question:
The Plastic Corporation has a current capital structure consisting of $150,000 of 15% debt and 3,500 shares of common stock. The tax rate is 40%.
a. Determine the earnings per share (EPS) when EBIT is $75,000 and $99,500.
b. Calculate the degree of financial leverage (DFL) using EBIT of $75,000 as a base.
c. What is the meaning of The Plastic Corporation’s DFL?
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To answer these questions we need to calculate the earnings per share EPS for different levels of EB...View the full answer
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Related Book For 
Principles Of Managerial Finance
ISBN: 9781292018201
14th Global Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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