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Compute the EPS that DSF expects to generate this year

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Problem - Debbie's Sod Farm (DSF) expects its EBIT to be $2,250 this year. DSF's marginal tax rate is 40 percent, it must pay $1,000 in interest this year, and it has 500 shares of common stock outstanding.

Required -

(a) Compute the EPS that DSF expects to generate this year.

(b) What is DSF's degree of financial leverage (DFL)? The firm has no preferred stock.

Reference no: EM132698975

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