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Unformatted text preview: fixed costs of $7.5 million. Interest payments on the borrowed capital will amount to $1,500,000. Your store sells one product, which is priced at $50. Your corporate tax rate is 35%. Your goal is to be able to obtain a net profit margin (net income / sales) of 15.6%. a) What is your firm's contribution margin? b) If your store suffers a 10% decline in operating income, what will be the effect on earnings per share? Why? c) Suppose sales are actually 15% greater than anticipated. What will be the effect on earnings per share? d) What is your break-even point in units?...
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- Spring '10