(7.50, 2.00, 1.87)

(1.87, 7.50, 1.11)

(1.87, 7.50, 2.22)

(DECREASE/REMAINS UNCHANGED/INCREASE)

(DECREASE/REMAINS UNCHANGED/INCREASE)

(DECREASE/REMAINS UNCHANGED/INCREASE)

3. The computation and interpretation of the degree of combined leverage (DCL) You and your colleague, Kimani, are currently participating in a finance internship program at Carter Chemical Company. Your current assignment is to work together to review Carter's current and projected income statements. You will also assess the consequences of managements and investment decisions on the firm's future riskiness. After much discussion, you and Kimani decide to calculate Carter's degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of combined leverage (DCL) based on this year's data to gain insights into Carter's risk levels. The most recent income statement for Carter Chemical Company follows. Carter is funded solely with debt capital and common equity, and it has 2,000,000 shares of common stock currently outstanding. Given this information, complete the following table and then answer the questions that follow. When performing your calculations, round your EPS and percentage change values to two decimal places. Everything else remaining constant, assume Carter Chemical Company decides to convert its labor-intensive manufacturing facility into a capitalequipment changes. How would this affect Carter's DOL, DFL, and DCL? - The DOL would be expected to - The DFL would be expected to - The DCL would be expected to