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The Plastic Corporation has a current capital structure consisting of $150,000 of 15% debt and 3,500 shares of common stock.

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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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Principles Of Managerial Finance

Principles Of Managerial Finance

ISBN: 9781292018201

14th Global Edition

Authors: Lawrence J. Gitman, Chad J. Zutter

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Question Details
Chapter # 13- Leverage and Capital Structure
Section: Problems
Problem: 12
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Question Posted: September 16, 2023 02:15:51
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