Which of the following statements is true? a. leverage reduces the expected values of both ebit and net income. b. leverage increases expected roe but decreases expected eps. c. leverage decreases the volatility of both roe and eps. d. investors can create their own leverage within their own portfolios.

Right medical introduced a new implant that carries a five-year warranty against manufacturer’s defects. based on industry experience with similar product introductions, warranty costs are expected to approximate 2% of sales. sales were $8 million and actual warranty expenditures were $42,750 for the first year of selling the product. what amount (if any) should right report as a liability at the end of the year?