Revenue of $90 bil, variable costs of 34.3 bil, fixed cost of 33 bil. Price of good $120, variable cost $46, tax rate 21%.

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Why does % change in EBIT (and EPS) go up and down much more than revenue? (each individually) 11. Use the following to analyze the optimal level of debt for Sony. The marginal tax rate is 21%, assume a riske free rute of 3% and a market risk premium of 5% (Numbers may be different or the same as above.) Sony 0 53.7 bil 210 bil 10% 40% Dollar Debt weight on debt cost of debt before tax Bets 5.0% 6.5% 3.0% 1.07 1.15 1.54 Cost of stock weight on stock WACC Use CAPM to find the costs of stock at the different levels of debt assuming a risk free rate of 3% and a market risk premium of 5% b. What are the weights of common stock at the three levels assuming no preferred stock? C What is the weighted average cost of capital at each level? (Note I gave the cost of debt before tax.) d. What is the optimal debt ratio of the three choices? Why