DCL

DOL (1.59, 1.67, 1.79) (remain constant, decrease, increase)

DFL (1.59, 1.07, 1.79) (remain constant, decrease, increase)

DCL (1.59, 1.67, 1.79) (remain constant, decrease, increase)

3. The computation and interpretation of the degree of combined leverage (DCL) You and your colleague, Ashley, are currently participating in a finance internship program at Tucker Manufacturing. Your current assignment is to work together to review Tucker's current and projected income statements. You will also assess the consequences of management's capital struce and investment decisions on the firm's future riskiness. After much discussion, you and Ashley decide to calculate Tucker's degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of combined leverage (DCL) based on this year's data to gain insights into Tucker's risk levels. The most recent income statement for Tucker Manufacturing follows. Tucker is funded solely with debt capital and common equity, and it has 3,000,000 shares of common stock currently outstanding. Given this information, complete the following table and then answer the questions that follow. When performing your computations, round your EPS value and the percentage change values to two decimal places. Everything else remaining constant, assume Tucker Manufacturing decides to immediately repay 50% of a bank loan prior to its maturity. How would this affect Tucker's DOL, DFL, and DCL? - The DOL would be expected to - The DFL would be expected to - The DCL would be expected to