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Integrative - Leverage and risk Firm R has sales of 1 0 5 , 0 0 0 units at $ 2 . 0 4 per
IntegrativeLeverage and risk Firm has sales of units at $ per unit, variable operating costs of $ per unit, and fixed operating costs of $ Interest is $ per year. Firm has sales of units at $ per unit, variable operating costs of $ per unit, and fixed operating costs of $ Interest is $ per year. Assume that both firms are in the tax bracket.
a Compute the degree of operating, financial, and total leverage for firm
b Compute the degree of operating, financial, and total leverage for firm W
c Compare the relative risks of the two firms.
d Discuss the principles of leverage that your answers illustrate.
a The degree of operating leverage for firm is Round to two decimal places.
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