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Homework answers / question archive / A firm has sales of $5,000,000 of which 65% are variable costs

are no fixed operating costs, but interest expense totals $750,000. The company is in the 35% tax bracket and has 1,000,000 shares outstanding.

a. Calculate the company's EBIT and EPS.

b. Calculate EBIT and EPS if sales goes up by 5% and if sales goes down by 5%.

c. For each case of part b, by what percent did EBIT and EPS change?

d. Compare the results of part c for EBIT and EPS.