Classico v. Robo Your best friend is very excited. They've decided to start a printing company, focused on servicing business and corporate customers. They've come to you for advise on how to set the company up. Your friend estimates sales will be $2,000,000 per year. They're considering two printing presses. The Robo is more complicated, more automated. If your friend chooses this option, variable costs will be $400,000 per year, but fixed costs will be quite high ($1,200,000 per year). The Classico is a more traditional press that would require more labour for set-up and production. If they purchased the second press, variable costs will be $1,200,000 per year and fixed costs would be $400.000 per year, Your friend is also trying to understand if there's a benefit to borrowing money from the bank to finance the printing business, or would they be better off financing the business through shareholder's equity. They believe they can finance the entire $5,000,000 in assets they will need by selling 500,000 shares to friends and family. Alternatively, the bank is willing to lend them $3,000,000 at 8.0% Interest with the rest coming from the sale of 200.000 shares to friends and family (Note: Your friend's company will need $5,000,000 to buy the press and any spare parts needed to maintain it) Required: A If you friend wanted to have a high degree of operating leverage which printing press would they choose? The Robo or the Classico? (Click to select) Calculate the degree of Operating Leverage the Degree of Financial Leverage and the Degree of Combined Leverage for each of the four alternatives: B