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:

A) Interest payments on the debt vary with EBIT levels
B) Interest payments on the debt stay fixed leaving less income to be distributed over fewer shares
C) Interest payments on the debt stay fixed, leaving less income to be distributed over more shares
D) Interest payments on the debt stay fixed, leaving more income to be distributed over less number of shares