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please answer ASAP Metal Inc. sells its tanks for $150 each and has variable costs of $75 per unit. Fixed costs amount to $2,000,000 and
please answer ASAP
Metal Inc. sells its tanks for $150 each and has variable costs of $75 per unit. Fixed costs amount to $2,000,000 and the company's tax rate is 30%. Sales for 2021 amounted to 50,000 tanks. The company has $20 mil of equity and $10 mil worth of bonds with a coupon rate of 8%. The current yield on the bonds is 7% Required: a. Prepare the company's income statement ( 4 marks) b. Calculate the company's degree of operating leverage ( 2 marks) c. Calculate the company's degree of financial leverage (2 marks) d. Calculate the company's degree of combined leverage (2 marks) e. Given the degree of combined leverage calculated in part d. Comment on the effect of a 20% increase in sales. (2 marks) f Interest rates have been increasing steadily over the past 3 months. Advise management on the implications of this for the company. (4 marks) Step by Step Solution
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