DEF Inc. sells camp stoves for $$65$ each and has variable costs of $$40$ per unit. Fixed costs amount to $$500,000$ and the company$$s tax rate is $30\%.$ Sales for $2023$ amounted to $80,000$ stoves. The company has $$9$ mil of equity and $$5$ mil worth of bonds with a coupon rate of $10\%.$ The current yield on the bonds is $15\%$

Required:

Prepare the company$$s income statement $(4$ marks$)$

Calculate the company$$s degree of operating leverage $(2$ marks$)$

Calculate the company$$s degree of financial leverage $(2$ marks$)$

Calculate the company$$s degree of combined leverage $(2$ marks$)$

Given the degree of combined leverage calculated in part d$.$ Comment on the effect of a $20\%$ increase in sales. $(2$ marks$)$

Interest rates are expected to increase significantly within the next month. Advise management on the implications of this for the company and steps that should be taken under these circumstances. $(4$ marks$)$