What does each indifference point show the firm

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Question 1: A firm is considering three different financing alternatives, debt, preferred stock, and common equity. The firm has created an EBIT-EPS chart that shows several indifference points. What does each indifference point show the firm?

Select one:

a. Total firm risk equals business risk times financial risk.

b. It shows the level of EBIT and EPS at which DFL is identical under two alternative financing plans.

c. The level of sales that generates identical EBIT and EPS figures.

d. The level of EBIT that generates identical EPS under two alternative financing plans.

Reference no: EM132564432

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