Question: A firm is currently expected to develop $2 EPS when operating income equals $4 million and interest expense equals $2 million. How low can operating

A firm is currently expected to develop $2 EPS when operating income equals $4 million and interest expense equals $2 million. How low can operating income drop before EPS are reduced by half, to $1? Ignore taxes.

a. Operating income drops to $3.5 million.

b. Operating income drops to $3.0 million.

c. Operating income drops to $2.5 million.

d. Operating income drops to $2.0 million.

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