1. The Ore Inc. fixed operating costs are $1,260,000 and its variable cost ratio (ie., variable costs as a fraction of sales) is 0.70. The firm has $3000,000 in bonds outstanding at an interest rate of 8%. The Ore Inc has 30,000 shares of $5 preferred stock and 150,000 shares of common stock outstanding.The Ore Inc is in the 50% corporate income tax bracket. Forecasted sales for next year are $9million. What is The Ore Inc degree of leverage at a sales level of $9million
2. The Ore Inc fixed operating costs are $1,260,000 and its variable cost ratio (variable cost as a fraction of sales) is 0.70. The firm has $3,000,000 in bounds outstanding at an interest rate of 8%. The Ore Inc has 30,000 shares of $5 preferred stock and 150,000 shares of common stock outstanding. The Ore Inc is in 50% corporate income tax bracket. Forecasted sales for nest year are $9million. What is The Ore Inc degree of financial leverage at an EBIT level of $1,440,000