When the expected level of EBIT exceeds the indifferent point for two alternative financial plans, (Equity financing and Debt-financing), then
A. The use of debt financing would be advantageous to increase EPS.
B. The use of equity financing would be advantageous to maximize EPS.
C. The use of debt-financing would reduce EPS.
D. The use of equity financing would keep the EPS constant.
Answer:A
When the expected level of EBIT exceeds the indifferent point for two alternative financial plans, (Equity financing and Debt-financing), then
A. The use of debt financing would be advantageous to increase EPS. B. The use of equity financing would be advantageous to maximize EPS. C. The use of debt-financing would reduce EPS. D. The use of equity financing would keep the EPS constant.