The company incurs costs of$18.42 million regardless of theoutput level. It sells 7.29 millionunits of its product at the price of$9.88, and its variable costs perunit are $2.56. The company has$46 million of debt with an annualinterest rate of 4.2%. What is thedegree of combined leverage atthe current level of sales? Roundto two decimals.

Combined leverage The type of leverage that helps the company to measure its financial strength is…

Answered: The company incurs costs of $18.42…

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

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Please Solve A and B
Callie Corporation’s products sell for $180 each. The variable cost of each product is $135, and fixed operating costs are $371,250. Callie pays $61,875 interest on its outstanding debt each year, and its marginal tax rate is 40 percent. If Callie expects to sell 11,000 units, what is its degree of operating leverage (DOL), its degree of financial leverage (DFL), and its degree of total leverage (DTL)? The firm has no preferred stock.
A firm sells 500,000 widgets at $40 each, the cost of the widgets is $25 each, expected general and administrative expenses are 20% of sales, the firm has $2,000,000 of debt at a rate of 5%, and taxes are 35%. Calculate the firm's earnings after taxes? O $1,560,000 O $1,750,000 O $2,210,000 O $2,100,000
Please Solve E
Services Company's sales are ₱600,000, its fixed expenses are ₱150,000, and its variable expenses are 60% of sales. The DEGREE OF OPERATING LEVERAGE of its current operations is ₱_______________.
Please Solve D
Boom Company has sales volume of 70,000 units with a unit selling price of $120 per unit. The variable expenses are $80 per unit, and the total fixed expenses are $2,100,000. 15. What is the degree of operating leverage? * 2.00 3.00 4.00 5.00 None of the above 16. If the sales volume increases by 15%, and all other items are the same, what will be the effect on the net operating income? * The net operating income will increase by $420,000 The net operating income will increase by $700,000 The net operating income will increase by $1,120,000 The net operating income will increase by $2,800,000 None of the above O O O
Xeta Inc., sells a box for $15 each. The box have a variable cost of $4 per unit, and the products' fixed operating costs are at $220,000 per year. The company's capital structure includes 55% debt and 45% equity. Annual interest expense is $25,000, and the corporate tax rate is 35%. 1.Calculate the break-even point in units. 2.If it sells 25,000 units, calculate the firm's EBIT and net income.
Your Company's fixed expenses total $150,000, its variable expense ratio is 60% and its variable expenses are $4.50 per unit. What is the selling price?
Thompson Trucking has $9 billion in assets, and its tax rate25%. Its basic earning power (BEP) ratio is 20%, and its returnon assets (ROA) is 5.25%. Whatis its time interest earned (TIF)ratio? Round you answer to twodecimal places.
Williamson Industries has $3 billion in sales and $2.826 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity. a. What level of sales could Williamson Industries have obtained if it had been operating at full capacity? Enter your answer in billions of dollars. Round your answer to five decimal places. $ billion b. What is Williamson's target fixed assets/sales ratio? Do not round intermediate calculations. Round your answer to two decimal places. % c. If Williamson's sales increase 13%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio? Enter your answer in billions of dollars. Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to five decimal places. billion $
The company BAC inc. sells a single product for $ 5 a unit. Its annual fixed operating costs are estimated at $ 180,000 including $ 30,000 in depreciation. Its unit variable cost is estimated at $ 2. The amount of interest paid annually to bondholders is $ 45,000. The corporate tax rate is 35%.a) Estimate the general breakeven point of the business?b) Estimate the company's cash flow breakeven point?c) Estimate the operating leverage of the business at a sales level ofd) 120,000 units?e) Estimate the company's financial leverage for an EBIT of $ 50,000?f) Estimate the total leverage of the business at a sales level of 80,000 units?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS