Empir Industries forecasts net income this coming year as shown below (in thousands of dolars):...
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Empir Industries forecasts net income this coming year as shown below (in thousands of dolars): EBIT $1,000 Interest expense Income before tax 0 1,000 Taxes -400 Net income 600 Approximately $250,000 of Empire's eamings will be needed to make new, positive-NPV investments. Unfortunately, Empire's managers are expected to waste 10 % of its net income on needless perks, pet projects, and other expenditures that do not contribute to the firm. All remaining income will be distributed to shareholders. What are the two benefits of debt financing for Empire? a. What are the two benefits of debt financing for Empire? OA. Tax and interest cost benefits O B. Interest cost benefits and reducing wasteful investment O C. Dividend and tax benefits O D. Tax benefits and reducing wasteful investment
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