8. Mias Fashion Products, Inc. has sales of $8,125,000, variable costs of $2,843,750, fixed operating costs of $3,125,000, and interest expenses of $125,000. The firms marginal tax rate is 21%. Mia has no preferred stock outstanding.

Using the data above, compute the operating income or EBIT for Mia.

A: $ 2,056, 250

B: $ 2,156,250

C: $ 452,813

D: $1,365,000

E: None of the answers provided is correct.

9. Rubys Pet Products, Inc. has Net Sales of $1,400,000, variable operating costs of $900,000, fixed operating costs of $200,000, and interest expenses of $80,000. The company is in the 21% tax bracket and has no preferred stock outstanding. Determine the firms Degree of Financial Leverage.

Rather than using the EBIT answer determined in question 8, assume that the EBIT for Ruby is $4,500,000. Using the other data provided for Ruby, determine the degree of financial leverage for the firm.

A: 1.0700

B: 1.0000

C: 1.3636

D: 1.1952

E: None of the answers provided is correct.