What is degree of financial leverage

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Reference no: EM131871284

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. (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: EM131871284

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