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Calculate the DFL for the firm

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Question - Wells and Associates has EBIT of $67,500. Interest costs are $22,500, and the firm has 15,000 shares of common stock outstanding. Assume a 40% tax rate.

A) Use the degree of financial leverage (DFL) formula to calculate the DFL for the firm.

B) IF the firm also has 1,000 shares of $6.00 annual dividend per share, what is the DFL?

Reference no: EM132964743

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