ferences Mailings Review View ma A E AEEE L I Albedre AaBbCcDc AabCcode AaB Heading 2. Steele Insulators is analyzing a new type of insulation for interior walls. Management has compiled the following information to determine whether or not this new insulation should be manufactured. The insulation project has an initial fixed asset requirement of $1.3 million, which would be depreciated straight-line to zero over the 12-year life of the project. Projected fixed costs are $985,000 and the anticipated annual operating cash flow is $185,000. What is the degree of operating leverage for this project? DOL-6.32 I DOL-Con margin/op income 3. Martin Corporation currently sells 180,000 units per year at a price of $7.00 per unit; its variable cost is $4.20 per unit, and fixed costs are $400,000. Martin is considering expanding into two additional states, which would increase its fixed costs to $650,000 and would increase its variable unit cost to an average of $4.48 per unit. If Martin expands, it expects to sell 270,000 units at $7.00 per unit. By how much will Martin's breakeven sales dollar level change? $ 805,556 4. Simon Software Co. is trying to estimate its optimal capital structure. Right now, Simon has a capital structure that consists of 100 percent equity. The risk-free rate is 6 percent and the market risk premium, RM-R is 5 percent. Currently the company's cost of equity (Rs). which is based on the CAPM. is Il percent and its tax rate is 40 percent. What would be Simon's estimated cost of equity if it were to change its capital structure to 40 percent debt MacBook Air