Kilburn enterprises expects sales of 50000 units at a 10


Kilburn Enterprises expects sales of 50,000 units at a $10 per unit in the coming year and must meet the following: variable operating costs at $6 per unit; fixed operating costs $40,000; interest of $50,000 and preferred stock dividends of $36,000. Kilburn is taxed at the 40% rate.

a. What is Kilburn’s degree of total leverage?

b. If Kilburn’s DOL is 1.50 and its DFL is 2.66, what is its DTL?

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Financial Management: Kilburn enterprises expects sales of 50000 units at a 10
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