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Calculate the degree of financial leverage

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Question - Calculate the degree of financial leverage (DFL) for a firm when its EBIT is JD4,000,000. The firm has JD3,000,000 in debt that costs 10% annually. And the firm has 15,000 shares of JD4 preferred stock outstanding. The firm pays 30% in taxes.

a. 0.80

b. 1.09

c. 4.38

d. 1.11

Reference no: EM133013693

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