McGee Corporation has fixed operating costs of $5 million and a variable cost ratio of 0.60. The firm has a $17 million, 10 percent bank loan and a $4 million, 12 percent bond issue outstanding. The firm has 0.7 million shares of $5 (dividend) preferred stock and 1.8 million shares of common stock ($1 par). McGees marginal tax rate is 40 percent. Sales are expected to be $80 million.

1. Compute McGees degree of operating leverage at an $80 million sales level. Round your answer to two decimal places.

2. Compute McGees degree of financial leverage at an $80 million sales level. Round your answer to two decimal places.

3. If sales decline to $76 million, forecast McGees earnings per share. Round your answer to the nearest cent. $