Question
Harper Corp. has 3 million shares outstanding at a market price of $10/share. They have 10,000 bonds outstanding, each with a par value of $1000.
Harper Corp. has 3 million shares outstanding at a market price of $10/share. They have 10,000 bonds outstanding, each with a par value of $1000. The current market price is $950. The annual coupon rate on the bonds is 6%. EBIT for the year is $4,500,000.
What is the degree of financial leverage (DOFL)?
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Financial Management Principles and Application
Authors: Arthur J. Keown, J. William Petty, David F. Scott, Jr.
10th edition
536514119, 536514110, 978-0536514110
