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The firm has a $1,250,000 loan paying 4 percent interest and 600 shares of $2.50 preferred stock outstanding. The corporate tax rate is 21 percent.

The firm has a $1,250,000 loan paying 4 percent interest and 600 shares of $2.50 preferred stock outstanding. The corporate tax rate is 21 percent. The firms EBIT is $120,000 and its sales are at $620,000. There 80,000 common shares outstanding. What is the firms degree of financial leverage (DFL)?

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