3. YEAR, Unit, Sales Price / Unit

2020, 4.000 units, $ 10,00

2021, 5.000 units, $ 12,00

2022, 6.000 units, $ 12,00

2023, 6.500 units, $ 14,00

2024, 6.700 units, $ 14,50

Interest Expense each year $ 1,000

Fixed Cost each year $ 7,500

Variable Costs as a Percent of Sales 60%

Projected Sales Growth 10%

Tax Rate 35%

Preferred Dividend $ 1,000

Common Shares Outstanding $ 100,000

The following questions are asked:

a. Calculate Net Income.

b. Calculate EPS (Earnings Per Share).

c. Calculate the BEP in Units and $ for each year.

d. If the target EBIT in 2020 is $50,000, determine the target unit sales to achieve this EBIT target.

e. Calculate DOL, DFL (degree of financial leverage), and DCL (Degree of Combined Leverage) or DTL.