Bell Brothers Has $3,000,000 in Sales

Multiple Choice

Bell Brothers has $3,000,000 in sales. Its fixed costs are estimated to be $200,000, and its variable costs are equal to 50 percent of sales. The company has $1,000,000 in debt outstanding with a before-tax cost of 10 percent. If Bell Brothers' sales increase by 20 percent, by what percent should its earnings per share (EPS) change?

A) 16.00%
B) 20.00%
C) 21.67%
D) 23.08%
E) 25.00%