A company had earnings before interest and taxes of $1.5 million in the most recent year,...

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A company had earnings before interest and taxes of $1.5 millionin the most recent year, and an interest expense of $250,000. Thecompany has a marginal corporate tax rate of 35%. What is the netincome for the leveraged company? What about the same company hadthey not used leverage (debt)?
a) If we compare the leveraged with the unleveraged company, howmuch was paid out to debt holders, equity holders, and totalbetween the two?
b) We should see more being paid out total to investors in theleveraged company than the unleveraged company. Where does thatdifference come from?

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A company had earnings before interest and taxes of $1.5 millionin the most recent year, and an interest expense of $250,000. Thecompany has a marginal corporate tax rate of 35%. What is the netincome for the leveraged company? What about the same company hadthey not used leverage (debt)?a) If we compare the leveraged with the unleveraged company, howmuch was paid out to debt holders, equity holders, and totalbetween the two?b) We should see more being paid out total to investors in theleveraged company than the unleveraged company. Where does thatdifference come from?