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NEW QUESTION: 1
Assume that a firm has a degree of financial leverage of 1.25. If sales increase by 20 percent, the firm will experience a 60 percent increase in EPS, and it will have an EBIT of $100,000. What will be the EBIT for this firm if sales do not increase?
A. $67,568
B. $113,412
C. $84,375
D. $100,000
E. $42,115
Answer: A
Explanation:
Explanation/Reference:
Explanation:
DTL = % change EPS/% change Sales = 60%/20% = 3.0.
DOL = DTL/DFL = 3.0/1.25 = 2.40.
Old EBIT = $100,000/[1 + (0.20)(2.40)] = $100,000/1.48 = $67,568.
Alternate solution:
Use DFL expression to calculate change in EBIT and previous EBIT:
DFL = 1.25 = %change EPS/%change EBIT
= 0.60/[change EBIT/($100,000 - change EBIT)]
= [0.60($100,000) - 0.60(change EBIT)]/change EBIT
1.25 change EBIT = $60,000 - 0.60(change EBIT)
1.85 change EBIT = $60,000
change EBIT = $32,432.
Old EBIT = $100,000 - $32,432 = $67,568.
NEW QUESTION: 2
Refer to the exhibit.
ASN 64523 has a multihomed BGP setup to ISP A and ISP B.
Which BGP attribute can you set to allow traffic that originates in ASN 64523 to exit the ASN through ISP B?
A. next-hop
B. origin
C. weight
D. multi-exit discriminator
Answer: D
NEW QUESTION: 3
A. Option E
B. Option D
C. Option A
D. Option C
E. Option B
Answer: C,D
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