2.83 should be the increase in earnings per share.
The net advantages of a firm's operations are its earnings. Additionally, earnings are the source of corporation tax obligations.
The information provided is
$950,000 in interest costs
A variable cost of 40,000:
270,000 taxes:
84,000 in fixed expenses would climb to 400,000
If sales rose by 7%.
the formula provided will be
DCL= Sales- VC / EBIT - I
Revenue before interest and tax (EBIT) Sales + VC + FC Equals EBIT.
DCL now makes use of Sales-VC/EBIT-I.
( which is the interest). EBIT- I is therefore denominated as
= 950,000-270,000-400,000-40,000.
The increase of 0.07 is equal to 0.1983 or
= 19.83%
(950,000-270,000) / (950,000-270,000-400,000-40,000)
= 2.83
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