Kermit's Hardware's $($KH$)$ fixed operating costs are $$20\mathrm{.}8$ million, and its variable cost ratio is $0\mathrm{.}30.$

The firm has $$10$ million in bonds outstanding with a coupon interest rate of $9\%.$ KH has $200,000$

shares of common stock outstanding. The firm has revenues of $$32\mathrm{.}2$ million, and its marginal tax

rate is $40\%.$ Compute KH$\text{'}$s degree of operating leverage.

$14\mathrm{.}81$

$5\mathrm{.}19$

$12\mathrm{.}95$

$4\mathrm{.}54$