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5. Albatross Airline?s fixed operating costs are $...

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5. Albatross Airline?s fixed operating costs are $5.8 million, and its variable cost ratio is 0.20. The firm has $2 million in bonds outstanding with a coupon interest rate of 8 percent. Albatross has 30,000 shares of preferred stock outstanding, which pays a $2.00 annual dividend. There are 100,000 shares of common stock outstanding. Revenues for the firm are $8 million, and the firm is in the 40 percent corporate income tax bracket. Compute the following for the firm: a. Degree of operating leverage b. Degree of financial leverage c. Degree of combined leverage and interpret this value

 

Paper#10217 | Written in 18-Jul-2015

Price : $25
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