SVO 8 You run a perpetual encabulator machine, which generates revenues averaging $23 million per year. Raw material costs are 60% of revenues. These costs are variable-they are always proportional to revenues. There are no other operating costs. The cost of capital is 12% Your firm's long-term borrowing rate is 9% Now you are approached by Studebaker Capital Corp, which proposes a fixed-price contract to supply raw materials at $13. 80 million per year for 9 years a. What happens to the operating leverage and business risk of the encabulator machine if you agree to this fixed-price contract? Operating leverage and business is increases Operating leverage and business risk decreases b. Calculate the present value of the encabulator machine with and without the fored-price contract (Do not round intermediate calculations. Enter your answers in dollars not in millions. Round your answers to the nearest whole dollar amount.) Perent Value Wicona Without contact