1. Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of tile for the home-building industry. Their financial information is as follows: Capital Structure Sinclair Boswell Debt @ 10% $1,020,000 0 Common stock, $10 per share 680,000 $1,700,000 $1,700,000 $1,700,000 Common shares 68,000 170,000 Operating Plan Sales (57,000 units at $15 each) $855,000 $855,000 Less: Variable costs 684,000 342,000 ($12 per unit) ($6 per unit) Fixed costs 0 307,000 Earnings before interest and taxes (EBIT) $171,000 $206,000
a. If you combine Sinclair’s capital structure with Boswell’s operating plan, what is the DCL? (Round the final answer to 2 decimal places.) DCL X
b. If you combine Boswell’s capital structure with Sinclair’s operating plan, what is the DCL? (Round the final answer to 2 decimal places.) DCL X
c. Not available in Connect.
d. In part b, if sales double, by what percentage will EPS increase? EPS will increase by %
2. Moe would like to know how much life insurance he will need for the future. Using "The Easy Method," calculate how much life insurance will he need if his current income is $90,000.