Delta projects sales of 100,000 units next year at an average price of $40 per unit. Variable
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Question:
Delta projects sales of 100,000 units next year at an average price of $40 per unit. Variable costs are estimated at 70% of revenue, and fixed costs will be $1.2 million. BWP has $1 million in bonds outstanding on which it pays 8%, and its marginal tax rate is 40%. There are 100,000 shares of stock outstanding which trade at their book value of $30.
- Compute Delta's contribution margin per unit, EAT, and EPS.
- Calculate Delta's breakeven point in units and dollars
- Calculate Delta's DOL, DFL and DTL.
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