Which One of the Following Statements Is Correct Concerning the Relationship

Multiple Choice

Which one of the following statements is correct concerning the relationship between a levered and an unlevered capital structure? Ignore taxes.

A) At the break-even point, there is no advantage to debt.
B) The earnings per share will equal zero when EBIT is zero for a levered firm.
C) The advantages of leverage are inversely related to the level of EBIT.
D) The use of leverage at any level of EBIT increases the EPS.
E) EPS are more sensitive to changes in EBIT when a firm is unlevered.