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Find and calculate the degree of financial leverage

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Question 1: Northwestern Savings and Loan has a current capital structure consisting of $250,000 of 16% (annual interest) debt and 2,000 shares of common stock. The firm pays taxes at the rate of 40%. Using $80,000 of EBIT as a base, calculate the degree of financial leverage (DFL).

Reference no: EM132558228

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