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Problem 14-7 Question 23 of 25 Check My Work (10 remaining) eBook McGee Corporation has fixed operating costs of $6 million and a variable
Problem 14-7 Question 23 of 25 Check My Work (10 remaining) eBook McGee Corporation has fixed operating costs of $6 million and a variable cost ratio of 0.60. The firm has a $18 million, 11 percent bank loan and a $9 million, 12 percent bond issue outstanding. The firm has 1.2 million shares of $3 (dividend) preferred stock and 2 million shares of common stock ($1 par). McGee's marginal tax rate is 40 percent. Sales are expected to be $100 million. a. Compute McGee's degree of operating leverage at an $100 million sales level. Round your answer to two decimal places. b. Compute McGee's degree of financial leverage at an $100 million sales level. Round your answer to two decimal places. c. If sales decline to $94 million, forecast McGee's earnings per share. Round your answer to the nearest cent. $ Jean Kau Check My Work (10 remaining)
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