A Corporation Reports Sales of $4,000,000,variable Costs of $500,000,fixed Operating

Multiple Choice

A corporation reports sales of $4,000,000,variable costs of $500,000,fixed operating costs of $1,250,000,and interest expense of $350,000.The corporation's EBIT is $3,250,000 and its marginal tax rate is 30%.If the corporation is able to increase its sales by 25%,then

A) its EBIT will increase by 25% and its EPS will increase by 25%.
B) its EBIT will increase by more than 25% and its EPS will increase by less than 25%.
C) its EBIT and EPS will both increase, but less than 25% due to fixed costs and taxes.
D) its EBIT will increase by more than 25% and its EPS will increase by more than the percentage increase in EBIT.