You have been hired as a business manager of Campus Deli $($CD$)$ which is located adjacent to the Campus. Sales were Rs$.11,00,000$ last year. Variable costs were $60\%$ of sales and fixed costs. The fixed costs are Rs$.2,60,000.$ The company has a total capital of Rs$.25$ lakh out of which $20\%$ is debt. The cost of debt is $10\%.$ and the rest equity comprising of $80,000$ shares at a book value of Rs$.25$ per share. The tax rate is $40\%.$ Your boss wants you to prepare a comprehensive report

particularly answering the following questions:

a$.$ What is business risk? What factors influence a firm's business risk?

b$.$ What is operating leverage, and how does it affect a firm's business risk?

c$.$ What is meant by the term 'financial leverage' and 'financial risk'?

d$.$ She wants you to calculate the Operating leverage, financial leverage and combined leverage for the company.

e$.$ She also wants to know what would be the percentage change in EBIT if the sales increases by $10\%.$