A firm has EBIT of $375,000, interest expense of $75,000, preferred di
A firm has EBIT of $375,000, interest expense of $75,000, preferred dividends of $6,000 and a tax rate of 40 percent. The firm’s degree of financial leverage at a base EBIT level of $375,000 is ________.
A) 0.97
B) 1.29
C) 1.27
D) 1.09
ANSWER
B
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