The net operating income (EBIT) for Bear Investment Company (BIC) this year is $80,000. During the year,

Question:

The net operating income (EBIT) for Bear Investment Company (BIC) this year is $80,000. During the year, the company paid $20,000 interest on its debt and $25,000 dividends to its common stockholders. If BIC’s marginal tax rate is 40 percent, what is the company’s degree of financial leverage (DFL)?