When comparing levered versus unlevered capital structures

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Reference no: EM131981804

When comparing levered versus unlevered capital structures, leverage works to decrease EPS for very low levels of EBIT because interest payments on the debt:

1. stay fixed, leaving more income to be distributed over fewer shares.

2. stay fixed, leaving less income to be distributed over more shares.

3. stay fixed, leaving less income to be distributed over fewer shares

4. increase as EBIT increases.

5. decrease as EBIT increases.

Reference no: EM131981804

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