When Comparing Levered Vs

Multiple Choice

When comparing levered vs. unlevered capital structures, leverage works to increase EPS for high levels of operating income because interest payments on the debt

A) vary with EBIT levels.
B) stay fixed, leaving less income to be distributed over fewer shares.
C) stay fixed, leaving less income to be distributed over more shares.
D) stay fixed, leaving more income to be distributed over fewer shares.