Computation of interest charges using degree

Reference no: EM1310282

Computation of interest charges using degree of combined leverage.

The second question is -A firm has sales if $10 million variable costs of $5million, EBIT of $2 million and a degree of combined leverage of 3.0 -if the firm has no preferred stock what are its annual interest charges? And if the firm wishes to lower its degree of combined leverage to 2.5 by reducing the interest charges what will be the new level of annual interest charges?

Reference no: EM1310282

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