Problem 9. (a) A new company to produce state-of-the-art car stereo systems is being considered by Jagger Enterprises. The sales price would be set at 1.5 times the variable cost per unit; the VC/unit is estimated to be $2.50; and fixed costs are estimated at $120,000. What sales volume would be required in order to break even, i.e., to have an EBIT of zero for the stereo business? (b) A venture capital investment group received a proposal from Wireless Solutions to produce a new smart phone. The variable cost per unit is estimated at $250, the sales price would be set at twice the VC/unit, fixed costs are estimated at $750,000, and the investors will put up the funds if the project is likely to have an operating income of $500,000 or more. What sales volume would be required in order to meet this profit goal? (c) Firms HD and LD are identical except for their level of debt and the interest rates they pay on debt; HD has more debt and pays a higher interest rate on that debt. Based on the data given below, what is the difference between the two firms' ROES? Applicable to Both Firms Assets $200 EBIT $40 Tax Rate 35% Firm HD's Data 50% 12% Firm LD's Data 30% 10% Debt Ratio: Interest Rate