PQR Manufacturing Corporation has $2,500,000 in debt outstanding. The company's before-tax cost of debt is 10%. Sales for the year totaled $4,200,000 and variable costs were 52% of sales. Net income was equal to $790,000 and the company's tax rate was 30%. If PQR's degree of total leverage is equal to 1.30, what is its degree of operating leverage? Do not round intermediate calculations. 

a. 1.5358 

b. 1.5880 

c. 1.0642 

d. 0.9100 

e. 1.1004.

Answer rating: 100% (QA)

Solution aCalculation of Earnings before tax EBT The formula for calculating the Degree of Earnings before tax is EBT Net income 1 Tax rate As per the ... View the full answer