A Firm Is Expected to Generate $1

A firm is expected to generate $1.5 million in operating income and pay $250,000 in interest. Ignoring taxes, this will generate $12.50 earnings per share. What will happen to EPS if operating income increases to $2.0 million?

A) EPS increases to $15.63.
B) EPS increases to $16.67.
C) EPS increases to $17.50.
D) EPS increases to $20.00.

Correct Answer:

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