# A Details JTSD Inc., sells 500,000 bottles of its soft drinks per year. Each bottle produced has a variable cost of $0.25 and sells for $0.45. Fixed operating costs are $50,000. The firm has current interest changes of $6,000 and dividends of $2,400, and corporate taxes are at 40%. Requirements: 1) Calculate the degree of a) operating leverage b) financial leverage c) total leverage 2) Recalculate degree of a) operating leverage b) financial leverage c) total leverage if the firm sells 750,000 bottles per year 3) If there is a break-even point, what is it? 4) Submit your analysis with your calculations PBR Inc. is evaluating the following three financing options, and it has 50% corporate tax rate. Option A Option B Option C Common Stock: $200,000 Common Stock: $100,000 Common Stock: $100,000 Bonds: $100,000 @8% Preferred Stock: $100,000 interest rate @8% Interest rate B Assumptions: a) Common Stock can be bought or sold @$20/share b) EBIT under all three options is $80,000 Requirements: 1) Determine EPS under each option 2) Determine the financial break-even point(s) under each option 3) Submit your analysis with your calculations