be a permanent part of the company's capital structure. The fledgling executives have decided to use a 40 percent tax rate in their analysis. a. Find the EBIT indifference level associated with the two financing proposals. b. Prepare an analytical income statement that proves EPS will be the same regardless of the plan chosen at the EBIT level found in part (a) 2Q-35 % Leverage analysti) You have developed the following analytical income statement for It represents the most recent year's operations, which ended yesterday. Yout your supervisor in the controller's office has just handed you a memorandum asking for written responses to the following questions: a. At this level of output, what is the degree of operating leverage? b. What is the degree of financial leverage? Variable costs Revenue before fixed costs Fixed costs EBIT 13,500,000 $16,500,00 8,000,000 $ 8,500,000 1,000,000 Earnings before taxes Taxes (50) Net income 3,750,000 3,750,000 e. What is the degree of combined leverage? d. What is the firm's break-even point in sales dollars? e. If sales should increase by 25 percent, by what percent would earnings before taxes (and net income) increase