Rekka Resin Moulding Inc

Rekka Resin Moulding Inc. has a 28% tax rate, 3 million common shares outstanding at a price of $18.25 each, pays 7.5% interest on its long-term debt of $55 million and pays $1 million in dividends to preferred shareholders. Last year the company had an EBIT of $15 million. This year the company expects an EBIT of $12 million. What is the company experiencing?

A) A degree of financial leverage of 0.7.
B) No degree of financial leverage of 0.9.
C) No degree of financial leverage of 1.3.
D) A degree of financial leverage 1.6.
E) A degree of financial leverage of 2.1.