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What is the degree of financial leverage

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Question - Labant Corporation is considering two financing alternatives. Under the first alternative, interest expense would be $280,000 and there would be 208,000 common shares outstanding. Under the second alternative, interest costs would be $200,000 and there would be 210,000 common shares outstanding. Labant has EBIT of $800,000 and is in the 30% tax bracket. What is the degree of financial leverage for Labant's second financing alternative?

Reference no: EM133052841

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