In an EPS-Operating Income Graph, Such as Figure 17

Multiple Choice

In an EPS-operating income graph, such as Figure 17.1, the slope of the line is steeper when the debt ratio is higher.The debt line has a negative intercept because

A) the break-even point is higher with debt.
B) a fixed interest charge must be paid even at low earnings.
C) the amount of interest per share has only a positive effect on the intercept.
D) the higher the interest rate, the greater the slope.