A company produces polyester only. Fixed costs are 10.000 TL. Break-even sales amount of polyester is 120.000
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Question:
A company produces polyester only. Fixed costs are 10.000 TL. Break-even sales amount of polyester is 120.000 TL. Sales price is 10 TL/kg. Company that has 25.000 outstanding shares will require a new financing of 500.000 TL from 50% common stock issuance and 50% bond issuance. All common stocks are sold at 10 TL per share (25.000 shares) and all bonds have a coupon rate of 8%. Expected EBIT is 100.000 TL. Income tax rate is 20%. What would be the degree of total leverage?
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