Given the following financial data for Boston Technology, compute the firm's degree of combined leverage. Assume a

marginal tax rate of 40%.

2010 2011

Sales $700,000 $760,000

Fixed costs 175,000 190,000

Variable costs 406,000 448,000

EBIT 119,000 122,000

Interest 42,000 46,000

Shares outstanding 100,000 102,000

Question 6Answer

a.

0.38

b.

0.38

c.

0.15

d.

0.29