Empire Industries forecasts net income this coming year as shown below (in thousands of dollars): EBIT...

 

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Empire Industries forecasts net income this coming year as shown below (in thousands of dollars): EBIT Interest expense $1,000 0 $1,000 Income before tax Taxes Net income -250 $ 750 Approximately $200,000 of Empire's earnings will be needed to make new, positive-NPV investments. Unfortunately, Empire's managers are expected to waste 10% of its net income on needless perks, pet projects, and other expenditures that do not contribute to the firm. All remaining income will be distributed to shareholders. a. What are the two benefits of debt financing for Empire? b. By how much would each $1 of interest expense reduce Empire's distributions to shareholders? c. What is the increase in the total funds Empire will pay to investors for each $1 of interest expense? a. What are the two benefits of debt financing for Empire? (Select the best choice below.) A. Tax and interest cost benefits B. Interest cost benefits and reducing wasteful investment C. Dividend and tax benefits D. Tax benefits and reducing wasteful investment b. By how much would each $1 of interest expense reduce Empire's distributions to shareholders? Each $1 of interest expense would reduce Empire's distributions to shareholders by $ (Round to three decimal places.) c. What is the increase in the total funds Empire will pay to investors for each $1 of interest expense? The increase in the total funds Empire will pay to investors for each $1 of interest expense is $ (Round to three decimal places.) Empire Industries forecasts net income this coming year as shown below (in thousands of dollars): EBIT Interest expense $1,000 0 $1,000 Income before tax Taxes Net income -250 $ 750 Approximately $200,000 of Empire's earnings will be needed to make new, positive-NPV investments. Unfortunately, Empire's managers are expected to waste 10% of its net income on needless perks, pet projects, and other expenditures that do not contribute to the firm. All remaining income will be distributed to shareholders. a. What are the two benefits of debt financing for Empire? b. By how much would each $1 of interest expense reduce Empire's distributions to shareholders? c. What is the increase in the total funds Empire will pay to investors for each $1 of interest expense? a. What are the two benefits of debt financing for Empire? (Select the best choice below.) A. Tax and interest cost benefits B. Interest cost benefits and reducing wasteful investment C. Dividend and tax benefits D. Tax benefits and reducing wasteful investment b. By how much would each $1 of interest expense reduce Empire's distributions to shareholders? Each $1 of interest expense would reduce Empire's distributions to shareholders by $ (Round to three decimal places.) c. What is the increase in the total funds Empire will pay to investors for each $1 of interest expense? The increase in the total funds Empire will pay to investors for each $1 of interest expense is $ (Round to three decimal places.)