Introduction to Finance Chapter 18 Problem 6
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Introduction to Finance Chapter 18 Problem 6
Capital Structure
A firm has sales of $10 million, variable costs of $4 million, fixed expenses of $1.5 million, interest costs of $2 million, and a 30 percent average tax rate.
- Compute its DOL, DFL, and DCL.
- What will be the expected level of EBIT and net income if next year's sales rise 10 percent?
- What will be the expected level of EBIT and net income if next year's sales fall 20 percent?
- 10 years ago
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