Use the following information to answer questions 1-5: Suppose # of units sold (Q) = 100,000...

Use the following information to answer questions 1-5:

Suppose # of units sold (Q) = 100,000 Price per unit (P) = $10
Variable cost (V) = $4
Fixed operating costs =250,000

Fixed financing cost = 100,000 Tax rate is 35%.

DOL = 1.71
DFL = 1.4
DTL = 2.4
How does net income change if unit sales increases by 3%? = 5.13%
How does financial leverage affect net income given a 1% change in operating income?

*I only need #5 answered please. I already calculated 1-4; I hope they are correct. Thank you!

Expert Solution

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jeff jeffy answered 2 years ago

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