Cowboy Company sells CDs with the following prizing and cost structure Selling price per unit is 4 and variable cost per unit 2.5 and the company has fixed of 200,000/=. The company sold the following units 120,000 200,000 and 300,000, for the years 2019, 2020 and 2021.

Required

I. Determine for cowboy company the Earnings Before Interest and (EBIT) for the three years (3 Marks)

II. Calculate for Cowboy company the Degree of Operating Leverage (DOL) When sales increased from 220,000 units to 320,000 units. Thus years 2020 to 2021. (3 marks)

III. If the Companys capital structure is 100,000 Common Stock of sh.1= each 10% 50,000 preferred stock of sh.1= each and 10% 200,000 Debt

Required

a. Determine the Earning per share EPS for the years 202 and 2021? (3 marks)

b. Calculate the Degree of Financial Leverage (DFL) when the company moved from 2020 to 2021(3 Marks)