1 A new business has developed its preliminary business model. It expects to incur BOTH fixed operating and financial costs; and the model projects Year 1 Sales of $650,000 (but team members think that Sales could be as low as $500,000 or as high as $900,000). The owners want to know what will happen to profits if the model Sales projection is incorrect. The primary concern is Sales less than $650,000 given the substantial fixed costs the model accepts. The Year 1 proforma Income Statement is as follows: Sales 650,000 Variable Expense 357,500 Gross Profit 292,500 Fixed Expenses 185,000 EBIT 107,500 Less: Fixed Financial Expenses 57,500 Income 50,000 Note: Ignore Depreciation and Taxes Given the company's projected Sales and its expense structure, what Degree of Operating Leverage (DOL) is the company willing to accept? (2 points) Given the fixed financial costs in the company model, by what % will Income change for each 1% deviation in EBIT? (3 points)