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we assumed $500,000 in EBIT but it was not revealed how this number was calculated. Suppose Napoli has an average sale price of $20 over

we assumed $500,000 in EBIT but it was not revealed how this number was calculated. Suppose Napoli has an average sale price of $20 over 100,000 units per year as their revenue. Here are two scenarios for their cost structure: a) the variable cost per order averages $7.50 with $750,000 in fixed costs or b) the variable cost per order averages $5.00 with $1,000,000 in fixed costs. Under both scenarios, what is the degree of operating leverage (DOL)? At 0% debt and 20% debt, what is their degree of financial leverage (DFL)? Combining the DOL and DFL results, what are the four degree of combined leverage (DCL) results you can obtain?

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