Prestige has revenue of $50 million with 20% variable costs. It has $20 million of bonds financed at 6% and has fixed costs of $30 million. What is Prestige's degree of total leverage?

a. 1.1.

b. 2.7.

c. 4.0.

d. 4.5.

CJD Enterprise's EPS increased from $2.00 last year to $4.00 this year with a 20% increase in sales. If CJD's degree of operating leverage is 3.0, then what is CJD's degree of financial leverage?

a. 1.5.

b. 1.67.

c. 5.0.

d. Cannot determine.