Applied Corporate Finance

2. Use the data in following table to compute the DOL, the DFL, and DTL. Unit sales 1,000 5.000 Sales $5,000. $25,000 Less Variable cost -1,000 -5,000 Less Fixed Cost -2.000 -2.000 Earnings Before Interest and Taxes 2,000 $18,000 (EBIT) Less Interest -1,000 -1,000 Net Profits Before Taxes $1,000 $17,000 Less Taxes -400 -6,800 Net Profits After Taxes $600 $10,200 EPS (1000 shares outstanding) $0.60 $10.20 b. Fixed costs are $10,000. Variable costs are $4 per unit. Each unit sells for $5. How many units must be sold to break even