Degree of financial leverage Northwestern Savings and Loan has a current capital structure… 1 answer below »


Degree of financial leverage Northwestern Savings and Loan has a floating cardinal texture consisting of $250,000 of 16% (annual attention) debit and 2,000 distributes of sordid hoard. The steadfast pays taxes at the reprove of 40%.

a. Using EBIT values of $80,000 and $120,000, mention the associated hues per distribute (EPS).

b. Using $80,000 of EBIT as a sordid, consider the station of financial leverage (DFL).

c. Rework talents a and b grand that the steadfast has $100,000 of 16% (annual attention) debit and 3,000 distributes of sordid hoard.