Question
1) Parker Investments has EBIT of $20,000, interest expense of $3,000, and preferred dividends of $4,090. If it pays taxes at a rate of 38%,
1) Parker Investments has EBIT of $20,000, interest expense of $3,000, and preferred dividends of $4,090. If it pays taxes at a rate of 38%, what is Parker's degree of financial leverage (DFL) at a base level of EBIT of $20,000? The degree of financial leverage is _____
2) Chico's has sales of 14,200 units at a price of $20.37 per unit. The firm incurs fixed operating costs of $30,000 and variable operating costs of $13.37 per unit. What is Chico's degree of operating leverage (DOL) at a base level of sales of 14,200 units? The degree of operating leverage is ______
3) Landscapes Unlimited has spent $2,300 evaluating a new service area for expanding its business territory. The expansion will require the purchase of a new truck for $35,600 and fitting the truck with a flatbed that will cost $6,400 to install. The company would realize $8,220 in after-tax proceeds from the sale of an old truck. If Landscapes' working capital is unaffected by this project, what is the initial investment amount for this project? The initial investment will be ______
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started