c. What is the degree of operating leverage at 17,000 bags and at 22,000 bags? Note: Round your answers to 2 decimal places. Bags 17,000 22,000 Degree of Operating Leverage d. If United Snack Company has an annual interest expense of $13,000, calculate the degree of financial leverage at both 17,000 and 22,000 bags. Note: Round your answers to 2 decimal places. Bags 17,000 Degree of Financial Leverage 22,000 Problem 5-13 (Algo) Break-even point and degree of leverage [LO5-2,5-5] United Snack Company sells 60-pound bags of peanuts to university dormitories for $16 a bag. The fixed costs of this operation are $106,600, while the variable costs of peanuts are $0.13 per pound. a. What is the break-even point in bags? Break-even point bags b. Calculate the profit or loss (EBIT) on 9,000 bags and on 22,000 bags. Bags 9,000 22,000 Profit/Loss Amount Problem 5-16 (Algo) Earnings per share and financial leverage [LO5-4] Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented here. Lenow Hall Debt @ 9% Common stock, $10 par Total $ 160,000 320,000 Common shares $ 480,000 32,000 Debt @ 9% Common stock, $10 par Total Common shares $ 320,000 160,000 $ 480,000 16,000 a. Complete the following table given earnings before interest and taxes of $20,000, $43,200, and $61,000. Assume the tax rate is 20 percent. Note: Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places. Leave no cells blank be certain to enter O wherever required. EBIT $ 20,000 $ Total Assets 480,000 EBIT/TA % Lenow EPS Hall EPS What is the relationship between the EPS of the two firms? % 43,200 $ 480,000 % $ 61,000 $ 480,000 % b-1 What is the EBIT/TA rate when the firm's have equal EPS? EBIT/TA rate b-2. What is the cost of debt? Cost of debt % % b-3. State the relationship between earnings per share and the level of EBIT. EPS is unaffected by financial leverage when the pre-tax return on assets (EBIT/TA) the cost of debt. c. If the cost of debt went up to 11 percent and all other factors remained equal, what would be the break-even level for EBIT? Break-even level