What is the companys ddl at its current sales level

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McMichael, Inc has expected sales of $40 million. Fixed operating cost is $5 ruillion and the variable cost ratio is 05 percent. They have outstanding debt of $10 million at an interest rate of 10 percent and $3million in a 12 percent bond. McMichael has 250,000 shares of preferred stock with a $10 dividend and 1 million shares of. outstanding common stock. Their average tax rate is 35% and marginal tax rate is 40%.

a. What is the company's DDL at its current sales level.

b. What is their current DFL?

c. Forecast McMichael's EPS if sales drop to $38 million.

Reference no: EM132344775

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