2. The degree of combined leverage is а. 2.1x b. 1.9x c. 2.9x d. 2.0x

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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2. The degree of combined leverage is
a. 2.1x
b. 1.9x
c. 2.9x
d. 2.0x
Transcribed Image Text:2. The degree of combined leverage is a. 2.1x b. 1.9x c. 2.9x d. 2.0x
Sales (75,000units) P 750,000
Variable costs 225,000
Contribution margin P 525,000
Fixed manufacturing costs 187,500
Operating income P 337,000
Interest 75,000
Earnings before taxes P 262,500
Taxes (at 31%) 81,375
Net income P 181,125
Shares outstanding 15,000
Transcribed Image Text:Sales (75,000units) P 750,000 Variable costs 225,000 Contribution margin P 525,000 Fixed manufacturing costs 187,500 Operating income P 337,000 Interest 75,000 Earnings before taxes P 262,500 Taxes (at 31%) 81,375 Net income P 181,125 Shares outstanding 15,000
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