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Jim Wilson is considering the possibility of opening his own machine shop. He expects first-year sales to be $540,000, and he feels that his variable
Jim Wilson is considering the possibility of opening his own machine shop. He expects first-year sales to be $540,000, and he feels that his variable costs will be approximately 62% of sales. His fixed costs in the first year will be $273,000 Jim will need $740,000 of financing and will use 61% equity financing at $10 per share and 39% debt at 14% interest a) Compute his break-even point in total sales dollars. (Round to the nearest whole dollars) b) Calculate the Degree of Operating Leverage at the expected sales of $600,000. (Round to 2 decimal places) c) Calculate the Degree of Financial Leverage (Round to 2 decimal places) d) Calculate the Degree of Combined Leverage (Round to 2 decimal places)
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