Pacific Communication Equipment (PCE, Inc.) manufactures wireless telephones. The selling price of its complete wireless system is $1,800 per unit. The variable cost for each unit is $800. Fixed costs are $400,000 per year. In 2011 PCE, Inc. sold 2,000 units for a total EBIT of $1,600,000. If the interest paid on the companys debt is $500,000, calculate the degree of total leverage (DTL).

Group of answer choices

a. 1.25

b. 1.45

c. 1.66

d. 1.82