Reference no: EM132640783

Cataleya Corporation makes surveillance equipment for intelligence organizations. Its sales are RM75,000,000. Fixed costs, including research and development, are RM40,000,000, while variable costs amount to 30 percent of sales. Cataleya plans an expansion which will generate additional fixed costs of RM15,000,000, decrease variable costs to 25 percent of sales, and also permit sales to increase to RM100,000,000. Cataleya pays RM1,000,000 interest and preferred dividends of RM3,000,000 per year and is taxed at a rate of 40%.

Calculate:

Question a) Cataleya Corporation's new Earnings Before Interest and Taxes (EBIT).

Question b) Cataleya Corporation's the degree of operating leverage at the new projected sales level.

Question c) Cataleya Corporation's the degree of financial leverage at the new projected sales level.

Question d) Cataleya Corporation's the degree of total leverage.