10 2 points eBook You run a perpetual encabulator machine, which generates revenues averaging $37 million...

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10 2 points eBook You run a perpetual encabulator machine, which generates revenues averaging $37 million per year. Raw material costs are 60% of revenues. These costs are variable-they are always proportional to revenues. There are no other operating costs. The cost of capital is 15%. Your firm's long-term borrowing rate is 12%. Now you are approached by Studebaker Capital Corporation, which proposes a fixed-price contract to supply raw materials at $22.20 million per year for 12 years. a. What happens to the operating leverage and business risk of the encabulator machine if you agree to this fixed-price contract? b. Calculate the present value of the encabulator machine with and without the fixed-price contract. Note: Do not round intermediate calculations. Enter your answers in dollars not in millions. Round your answers to the nearest whole dollar amount. Print References Complete this question by entering your answers in the tabs below. Required A Required B What happens to the operating leverage and business risk of the encabulator machine if you agree to this fixed-price contract? What happens to the operating leverage and business risk of the encabulator machine if you agree to this fixed-price contract? < Required A Required B > 10 2 points eBook You run a perpetual encabulator machine, which generates revenues averaging $37 million per year. Raw material costs are 60% of revenues. These costs are variable-they are always proportional to revenues. There are no other operating costs. The cost of capital is 15%. Your firm's long-term borrowing rate is 12%. Now you are approached by Studebaker Capital Corporation, which proposes a fixed-price contract to supply raw materials at $22.20 million per year for 12 years. a. What happens to the operating leverage and business risk of the encabulator machine if you agree to this fixed-price contract? b. Calculate the present value of the encabulator machine with and without the fixed-price contract. Note: Do not round intermediate calculations. Enter your answers in dollars not in millions. Round your answers to the nearest whole dollar amount. Print References Complete this question by entering your answers in the tabs below. Required A Required B What happens to the operating leverage and business risk of the encabulator machine if you agree to this fixed-price contract? What happens to the operating leverage and business risk of the encabulator machine if you agree to this fixed-price contract? < Required A Required B >