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Integrative-Leverage and risk Firm R has sales of 101,000 units at $1.97 per unit, variable operating costs of S1.68 per unit and fixed operating costs

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Integrative-Leverage and risk Firm R has sales of 101,000 units at $1.97 per unit, variable operating costs of S1.68 per unit and fixed operating costs of $6,050. Interest is $10,120 per year. Firm W has sales of 101,000 units at $2.54 per unit, variable operating costs of $1.02 per unit, and fixed operating costs of S62,900. Interest is $17,100 per year. Assume that both firms are in the 40% tax bracket. a. Compute the degree of operating, financial, and total leverage for firm R. 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 Ris (Round to two decimal places.) The degree of financial leverage for firm Ris (Round to two decimal places.) The total leverage for firm Ris (Round to two decimal places.) b. The degree of operating leverage for firm Wis. (Round to two decimal places.) The degree of financial leverage for firm Wis (Round to two decimal places.) The total leverage for fimm Wis (Round to two decimal places.) c. Compare the relative risks of the two firms. (Select from the drop-down menus.) Firm V has less operating (business) risk but more financial risk than firm d. Discuss the principles of leverage that your answers illustrate. (Select all the choices that apply.) A. Since total leverage is the product of operating and financial leverage, each firm may structure itself differently and still have the same amount of total risk. B. Since total leverage is the sum of operating and financial leverage, each firm may structure ilself differently and still have the same amount of total risk. c. Two firms with differing operating and financial structures will always be leveraged differently. OD. Two firms with differing operating and financial structures may be equally leveraged

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