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Kings Landing Companys (KLC) fixed operating costs are $1,260,000 and its variable cost ratio (i.e., variable costs as a fraction of sales) is 0.70. The
Kings Landing Companys (KLC) fixed operating costs are $1,260,000 and its variable cost ratio (i.e., variable costs as a fraction of sales) is 0.70. The firm has $3,000,000 in bonds outstanding at an interest rate of 8 percent. KLC has 30,000 shares of common stock outstanding. KLC is in the 50 percent corporate income tax bracket. Forecasted sales for next year are $9 million. What is KLCs degree of TOTAL LEVERAGE at a sales level of $9 million?
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