Assume that a company generates $5,000,000 in sales (1,000,000 units sold at a price of $5...
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Assume that a company generates $5,000,000 in sales (1,000,000 units sold at a price of $5 per unit), that its variable costs equal 67 percent of sales, its fixed costs are $500,000, its tax rate is equal to 40%, and that it has 2,000,000 shares of common stock outstanding. The company estimates that if its sales were to increase 10 percent, its net income and EPS would increase 22 percent. Determine by how much net income will increase (percent) if EBIT increases by 30 percent. (Assume that the change in sales will have no effect on the company's tax rate.) 52% 46% 38% O 40% O 36% Assume that a company generates $5,000,000 in sales (1,000,000 units sold at a price of $5 per unit), that its variable costs equal 67 percent of sales, its fixed costs are $500,000, its tax rate is equal to 40%, and that it has 2,000,000 shares of common stock outstanding. The company estimates that if its sales were to increase 10 percent, its net income and EPS would increase 22 percent. Determine by how much net income will increase (percent) if EBIT increases by 30 percent. (Assume that the change in sales will have no effect on the company's tax rate.) 52% 46% 38% O 40% O 36%
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