The Sterling Tire Company's income statement for 2010 is as follows: STERLING TIRE COMPANY

Income Statement

For the Year Ended December 31, 2010 Sales (39,000 tires at $98 each) $ 3,822,000 Less: Variable costs (39,000 tires at $49) 1,911,000 Fixed costs 590,000 Earnings before interest and taxes (EBIT) 1,321,000 Interest expense 59,500 Earnings before taxes (EBT) 1,261,500 Income tax expense (20%) 252,300 Earnings after taxes (EAT) $1,009,200 (a) Compute the degree of operating leverage. (Enter only numeric value rounded to 2 decimal places.)

Degree of operating leverage

(b) Compute the degree of financial leverage. (Enter only numeric value rounded to 2 decimal places.)

Degree of financial leverage

(c) Compute the degree of combined leverage. (Enter only numeric value rounded to 2 decimal places.)

Degree of combined leverage

(d) Compute the break-even point in units. (Enter only numeric value rounded to nearest whole number.)

Break-even point units

Midwest Tires has expected sales of 98,000 tires this year, an ordering cost of $4per order, and carrying costs of $1.60 per tire.

(a) What is the economic ordering quantity? Economic ordering quantity tires (b) How many orders will be placed during the year? Number of orders (c) What will the average inventory be? Average inventory tires

Compute the cost of not taking the following cash discounts.

(a) 2/17, net 40. (Use 360 days in a year. Round your intermediate calculations and final answers to 2 decimal places . Omit the "%" sign in your response.)

Cost of lost discount % (b) 2/17, net 40. (Use 360 days in a year. Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)

Cost of lost discount % (c) 4/12, net 60.(Use 360 days in a year. Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)

Cost of lost discount % (d) 3/11, net 160.(Use 360 days in a year. Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)

Cost of lost discount %

Your bank will lend you $2,100 for 45 days at a cost of $30 interest.

What is your effective rate of interest?