To expand and reach value-added products for its customers, PT GDAM has prepared 2 subsidiaries that refine CPO and market it as cooking oil. One of them is PT Arah Bakti Hijau (PT. ABH) which covers sales for the center and Java as well as the entire eastern Indonesia region. With an operational cost of IDR 12,000,000,000 and a fixed operating cost of IDR 9,000 / liter. With a selling price of IDR 15,000 / liter. Liter. Company tax bracket 35%. PT. ABH has Bonds of Rp. 40,000,000,000 with a coupon interest rate of 9% (annual). with a debt ratio of 40%. The equity structure consists of 8,000 shares of Rp. 500 (annual dividend per share) of preferred shares in the channel and also owns 350,000 measured common shares. Recent annual sales figures are 4,000,000 liters

a. Measure the Firms Degree of Operating Leverage (DOL) using the current level of sales in Quantity as a base. Explain in detail the result of your calculation. Show the effect of the 20% increase in sales toward EBIT (5pts).

b. Measure the firms Degree of Financial Leverage (DFL)at base level EBIT. Based on your result, explain in detail the effect of financial leverage (5pts).

c. Measure the firms Degree of Total Leverage (DTL)using the current level of sales in Quantity as a base. Explain in detail the combined effect of operating and financial leverage on firm risk, according to your result (5pts).

d. The firms are considering 2 alternatives capital structures: 0% debt and the current 30% debt ratio. For 0% debt capital structure, PT. AAH has 800.000 shares of common stock outstanding and no preferred stock. For 0% debt capital structure, PT. ABH has 500.000 shares of common stock outstanding and no preferred stock. Analyse the risk of each capital structure alternative by performing the EBIT-EPS analysis (you are free to choose any level of EBIT). Decide which capital structure option i.e., with current Debt level of 30%, or with No Debt is better? Explain your result, prove with EBIT simulation (5 pts).