In the EBIT-EPS Approach to Capital Structure, a Constant Level

Multiple Choice

In the EBIT-EPS approach to capital structure, a constant level of EBIT is assumed

A) to emphasize the relationship between interest expenses and taxes.
B) to ease the calculations of owners' equity.
C) to isolate the impact on returns of the financing costs associated with alternative capital structures.
D) to concentrate on the effect of revenue and expense on capital structure decisions.