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problem: The company expects sales if silicon chips to be $60 million this year Because this is a very capital intensive business fixed operating cost are $20 million the variable cost ratio is 40 percent the firm’s debt obligations consist of a$4 million 10 percent bank loan and a $2 million bond issue with a 11 percent coupon rate. The company has one million shares of common stock outstanding and its marginal tax rate is 40 percent. I need to find out the degree if operating leverage and financial leverage and the combined leverage. Compute EPS if sales is declined by five percent.

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Basic Finance, Finance

Category:- Basic Finance
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