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Chapter 13 Homework Answers

Chapter 13 Homework Answers - = 1.56 b DFL at EBIT level of...

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CHAPTER 13 CAPITAL STRUCTURE POLICY: FOUNDATION CONCEPTS SOLUTIONS TO PROBLEMS: 2. a. Fixed costs = $2,625,000 Variable operating costs = $9,375,000 Variable cost ratio = 0.625 b. i. DOL = 1.875 ii. DFL = 1.333 iii. DCL = 2.499 c. DCL = $5.50 3. a. DCL = 5.0 b. D CL = 5.41 c. $212,000 in order to maintain a DCL equal to 5.0 in 2006 (same as in 2005). 6. a. EBIT = $80,000,000 - .65($80,000,000) - $10,000,000 = $18,000,000 DOL at sales level of $80 million
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Unformatted text preview: = 1.56 b. DFL at EBIT level of $18 million = 1.178 c. Forecast EPS = $4.16 94 Chapter 13 – Capital Structure Policy: Foundation Concepts 12. a. i. Q b = 5,000 copies ii. S b = $150,000 c. Q = 6,500 copies d. Q b = 8,750 copies 16. Check your answers to these theory questions with the Supplemental Instructor or you can come by my office during my office hours 95...
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