Determine the degree of combined leverage and interpret the, Ask an Expert

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problem: I have a problem on fixed operating cost they are 5.8 million as it variable cost ratio is 0.20 the firm has $2 million on bonds outstanding with a coupon interest rate of eight percent. They have 30,000 shares of preferred stock outstanding which pays USD 2 annual dividend there are 100,000 shares of common stock outstanding. Revenues for the firm are USD 8 millions and the firm is in the 40% income tax bracket. I need to find out degree of operating leverage and financial leverage and to determine the degree of combined leverage and interpret the value.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M916245

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