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BBF 2124 FINANCIAL MANAGEMENT II 4 March 2022 QUESTION 2 a) Brigham Corporation is considering acquiring a small courier firm in the same line of
BBF 2124 FINANCIAL MANAGEMENT II 4 March 2022 QUESTION 2 a) Brigham Corporation is considering acquiring a small courier firm in the same line of business. The financial manager is evaluating the operating structure based on the information provided. The firm has annual interest expense of RM950, the preferred stock dividends of RM1200, common shares outstanding of 15,000, and a tax rate of 40 percent. The fixed operating costs is RM800, variable operating cost per unit is RM0.75, while the price per unit is RM2.50. Assume the base sales level of the firm is 35,000. How much Earnings before Interest and Tax"" (EBIT) and Earnings per share (EPS) will Brigham Corporation generate? (7 marks) Calculate the operating breakeven point in units. (2 marks) (iii) Calculate the degree of total leverage (DTL) at the base sales level. (4 marks)
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