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What is the degree of financial leverage

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Question - Weather Corporation is considering two financing alternatives. Under the first alternative, interest expense would be $10,000 and there would be 3,000 common shares outstanding. Under the second alternative, interest costs would be $5,000 and there would be 3,250 common shares outstanding. Weather has EBIT of $70,000 and is in the 35% tax bracket. What is the degree of financial leverage for the second financing alternative?

Reference no: EM133073059

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