JMC Corp. also wants to double its sales to 1,000,000 bottes next year. Towards that it plans to restructure its capital. It currently is financed entirely by equity of $200,000. It plans to reduce its equity 50% and borrow long-term debt of $200,000 @ 5% interest cost.

 

Required:

1) Calculate the new Degree of Financial Leverage (DFL)

Answer rating: 100% (QA)

The Degree of Financial Leverage DFL measures the sensitivity of earnings per share EPS to changes i... View the full answer