Kiwi Airlines has fixed operating costs of $3 million, and its variable costs amount to 20 percent of sales revenue. The firm has $2 million in bonds outstanding with a coupon interest rate of 8 percent. Revenues for the firm are $9 million and the firm is in the 21 percent corporate income tax bracket. What is the firm's degree of operating leverage? SET YOUR CALCULATOR TO 4 DECIMAL PLACES. ROUND TO 2 DECIMAL PLACES AT THE END. FOR EXAMPLE, IF YOUR ANSWER IS 9.4567, ENTER IT AS 9.46. Sand Key Development Company has a capital structure consisting of $20 million of 10% debt and $30 million of common equity. The firm has 500,000 shares of common stock outstanding. Sand Key is planning a major expansion and will need to raise $15 million. The firm must decide whether to finance the expansion with debt or equity. If equity financing is selected, common stock will be sold at $75 per share. If debt financing is chosen, 8% coupon bonds will be sold. The firm's marginal tax rate is 34%. Determine the level of operating income at which Sand Key would be indifferent between debt financing and equity financing. $6,725,000 $4,625,000 $5,150,000 $6,200,000 $5,675,000