Coats Corp

Multiple Choice

Coats Corp. generates $10,000,000 in sales. Its variable costs equal 85% of sales and its fixed costs are $500,000. Therefore, the company's operating income (EBIT) equals $1,000,000. The company estimates that if its sales were to increase 10%, its net income and EPS would increase 17.5%. What is the company's interest expense?

A) $150,000
B) $142,857
C) $128,929
D) $135,714
E) $122,482