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Question
Given the following financial data for Boston Technology, compute the firm's degree of combined leverage. Assume a marginal tax rate of 40%.| 2004 | 2005 | |
| Sales | $700,000 | $760,000 |
| Fixed costs | 175,000 | 190,000 |
| Variable costs | 406,000 | 448,000 |
| EBIT | 119,000 | 122,000 |
| Interest | 42,000 | 46,000 |
| Shares outstanding | 100,000 | 102,000 |
a. 0.29
b. -0.38
c. -0.15
d. 0.38
Answer
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