In 2019, Alafaya had sales of $950,000 and paid taxes of $84,000. Because of the low...

In 2019, Alafaya had sales of $950,000 and paid taxes of $84,000. Because of the low interest rate environment, the firm also borrowed some money from the local bank and paid $40,000 in interest expense. In addition, the firm incurred Variable Costs and Fixed Costs of $270,000 and $400,000 respectively. If sales increase by 5%, what should be the increase in earnings per share?

Group of answer choices

14.17%

5.83%

5.0%

12.14%

8.17%

Solutions

Expert Solution

Correct answer: 14.17%

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 2 years ago

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