Duopharma Innovation Sdn Bhd$,$ a Malaysian giant

firm which produces small boats. One boat is selling

for $$14,000.$ Each boat has variable operating costs of

$$12,200.$ Fixed operating costs are $$8,145,000$ per

year. The firm pays $$518,090$ interest and preferred

dividends of $$490,000$ per year. At this point, the firm

is selling $8,000$ boat per year and is taxed at a rate of

$31\%.$ The firm has $2,000,000$ common stock shares

outstanding.

A$)$ Calculate and interpret the operating breakeven

point for Duopharma

Innovation.

marks$)$

B$)$ On the basis of the firm's current sales of $8,000$

boat and its interest and preferred dividend costs,

calculate and interpret its EBIT and earnings

available for common stock

shares.

$(12$ marks$)$

C$)$ Calculate EPS in $8000$ boats

sales.

$(12$ marks$)$

D$)$ Calculate and interpret the firm's degree of

operating leverage $($DOL$).(12$ marks$)$

E$)$ Calculate and interpret the firm's degree of

financial leverage $($DFL$).(12$ marks$)$

F$)$ Calculate and interpret the firm's degree of total

leverage $($DTL$).(12$ marks$)$

G$)$ The company has entered into a contract to

produce and sell an additional $800$ boats in the

coming year. Use the DOL, DFL$,$ and DTL to

predict and calculate the changes in EBIT and

earnings available for common stock. Check your

work with a simple calculation of the firm EBIT

and earnings available for common, using the basic

information given.

$(28$ marks$)$