Problem 20-01 Firm A has $9,600 in assets entirely financed with equity. Firm B also has $9,600 in assets, but these assets are financed by $4,800 in debt (with a 12 percent rate of interest) and $4,800 in equity. Both firms sell 12,000 units of output at $3.00 per unit. The variable costs of production are $1, and fixed production costs are $14,000. (To ease the calculation, assume no income tax.) The answers differ because Firm A uses : equity financing/financial leverage a. What is the operating income (EBIT) for both firms? Round your answers to the nearest dollar. while Firm B uses: equity financing / financial leverage Firm A: $ Firm B: $ The sucessful use of: equity financing / financial leverage b. What are the earnings after interest? Round your answers to the nearest dollar. Firm A: $ Firm B: $ C. If sales increase by 10 percent to 13,200 units, by what percentage will each firm's earnings after interest increase? To answer the question, determine the earnings after taxes and compute the percentage increase in these earnings from the answers you derived in part b. Round your answers to one decimal place. Firm A: % Firm B: % d. Why are the percentage changes different? while Firm Buses -Select- The successful use of -Select- magnifies the percentage increase in The answers differ because Firm A uses -Select- earnings when sales expand