Vapor Lock Motors’ EBIT is $7,000,000, the company’s interest expense is $2,000,000, and its tax rate is 40 percent. Vapor Lock’s beta is 1.5. a. What is Vapor Lock’s DFL? b. If Vapor Lock were able...

Vapor Lock Motors’ EBIT is $7,000,000, the company’s interest expense is $2,000,000,
and its tax rate is 40 percent. Vapor Lock’s beta is 1.5.
a. What is Vapor Lock’s DFL?
b. If Vapor Lock were able to grow its EBIT by 50%, what would be the percentage
increase in net income?
c. If Vapor Lock were able to grow its EBIT by 50%, what would be the resulting
net income?