Determine the associated earnings per share

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Degree of financial leverage Northwestern Savings and Loan has a current capital structure consisting of $260,000 of 15% (annual interest) debt and 3,000 shares of common stock. The firm pays taxes at the rate of 21%.

a. Using EBIT values of $83,000 and $120,000, determine the associated earnings per share (EPS).

b. Using $83,000 of EBIT as a base, calculate the degree of financial leverage (DFL).

C. Rework parts a and b assuming that the firm has $99,000 of 15% (anndetermine the associated earnings per share ual interest) debt and 4,000 shares of common stock.

Reference no: EM133253195

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