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Question 1) ABC incorporate has an annual net income of $625000 and pays 300,000 in taxes. The companys cost of debt Is 10%. Its annual

Question 1)

ABC incorporate has an annual net income of $625000 and pays 300,000 in taxes. The companys cost of debt Is 10%. Its annual interest is $260,000.

Calculate the degree of financial leverage. (rounded to 2 decimal places)

Question 2)

The stock price of a company is $20. If the company does a reverse 3 for 1 stock split, what will the new price of the share be?

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