(Leverage and EPS) You have developed the following pro forma income statement for your corporation.
a. If sales should increase by 25 percent. by what percent would earnings before interest and taxes and net income increase?
b. If sales should decrease by 25 percent, by what percent would earnings before interest and taxes and net income decrease?
c. If the firm were to reduce its reliance on debt financing such that interest expense were cut in half( how would this affect your answers to parts a and b?