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Question 2, P13-16 (similar to) Part 1 of 8 HW Score: 0%, 0 of 8 points O Points: 0 of 1 Save Integrative Leverage
Question 2, P13-16 (similar to) Part 1 of 8 HW Score: 0%, 0 of 8 points O Points: 0 of 1 Save Integrative Leverage and risk Firm R has sales of 105,000 units at $1.99 per unit, variable operating costs of $1.74 per unit, and fixed operating costs of $6.030. Interest is $10,020 per year Firm W has sales of 105,000 units at $2.53 per unit, variable operating costs of $0.95 per unit, and fixed operating costs of $62,200 Interest is $17,300 per year Assume that both firms are in the 40% tax bracket. a. Compute the degree of operating, financial, and total leverage for firm R. b. Compute the degree of operating, financial, and total leverage for firm W c. Compare the relative risks of the two firms. d. Discuss the principles of leverage that your answers illustrate a. The degree of operating leverage for firm R is (Round to two decimal places.)
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