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E Background Layout Theme Transition 1 2 3 4 5 7 9 10 11 12 Question 4 Sheena Kereta, CFA, is a financial analyst specializing

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E Background Layout Theme Transition 1 2 3 4 5 7 9 10 11 12 Question 4 Sheena Kereta, CFA, is a financial analyst specializing in the valuation of auto companies. She has spent the last week gathering information on two competing auto manufacturers in Malaysia. Each company manufactures a single low-cost model and sells it in a highly competitive market. The sales price and units sold vary due to intense competition in the low-cost segment. Sheena has summarized the information in the table below. Penang Langkawi Number of units produced and sold 300,000 330,000 Standard deviation of unit sales 30,000 19.800 Sales price per unit MYR 25,000 MYR 30,000 Variable cost per unit MYR 10.000 MYR 17.000 Fixed operating cost MYR 2 500,000,000 MYR 2,000,000,000 Interest expense MYR 1,000,000,000 MYR 1,500,000,000 If unit sales increase by 10 percent, the expected change in operating income for Penang Autos will be closest to: OPTION A: 10.0 percent. OPTION B: 20.0 percent. OPTION C: 22.5 percent

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