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ATech has fixed costs of $12 million and profits of $4 million. Its competitor, ZTech, is roughly the same size and this year earned the

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ATech has fixed costs of $12 million and profits of $4 million. Its competitor, ZTech, is roughly the same size and this year earned the same profits, $4 million. But it operates with higher fixed costs of $13 million and lower variable costs. Required: What is the degree of operating leverage (DOL) for each company? (Defined here as 1+ Fixed costs/Profit.) (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. Which firm would you expect to have profits that are more sensitive to the state of the economy? ATech ZTech b. Which firm would you expect to have the higher stock market beta? ATech ZTech

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