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Given the following information, what is the degree of financial leverage? Sales = $10,000,000 Fixed operating costs = $2,275,000 Variable operating costs = $4,400,000 Tax

Given the following information, what is the degree of financial leverage?

Sales = $10,000,000

Fixed operating costs = $2,275,000

Variable operating costs = $4,400,000

Tax rate = 25%

Common stock: 750,000 shares, $2 annual dividend

Bonds: Face (maturity) value = $5,000,000; Coupon rate = 5%

Preferred stock: 200,000 shares, $4 annual dividend

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