Degree of financial leverage northwestern savings and loan

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Degree of financial leverage Northwestern Savings and Loan has a current capital structure consisting of $300,000 of 18% (annual interest) debt and 4,000 shares of common stock. The firm pays taxes at the rate of 21%. a. Using EBIT values of $79,000 and $118,000, determine the associated earnings per share (EPS). b. Using $79,000 of EBIT as a base, calculate the degree of financial leverage (DFL). c. Rework parts a and b assuming that the firm has $94,000 of 18% (annual interest) debt and 5,000 shares of common stock.

Reference no: EM133253178

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