In an EPS-EBI Graphical Relationship,the Debt Line and the No

Multiple Choice

In an EPS-EBI graphical relationship,the debt line and the no debt line intersect.Which one of these is true at the intersection point?

A) The advantages of debt outweigh the disadvantages of debt.
B) The aftertax earnings of both capital structures are equal.
C) The earnings per share for both capital structures equal zero.
D) There is no advantage or disadvantage to debt.
E) The EPS is maximized for both the levered and the unlevered firm.