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Calculate combined degree of leverage

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Point 1: Albatross Airline's fixed operating costs are 5.8 million dollar, and its variable cost ratio .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 Rs.2 yearly dividend. There are 100,000 shares of common stock outstanding. Revenues for the firm are 8 million dollar and the firm is in the 40% corporate income tax bracket.

Question 1: Calculate Combined Degree of Leverage

Reference no: EM132524699

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