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Assume That a Firm Currently Has EBIT of $2,000,000, a Degree

Question 59

Multiple Choice

Assume that a firm currently has EBIT of $2,000,000, a degree of total leverage of 7.5, and a degree of financial leverage of 1.875. If sales decline by 20% next year, then what will be the firm's expected EBIT in one year?


A) $380,000
B) $441,000
C) $400,000
D) $361,000
E) $420,000

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