Leverage Sensitivity Exercise

View table below of baseline profits:

	Profits from Operations Unchanged
Total Debt	$ 14.00	$ 18.00	$ 22.00	$ 26.00
Total Equity	$ 59.00	$ 55.00	$ 51.00	$ 47.00
Profit From Operations	$ 14.00	$ 14.00	$ 14.00	$ 14.00
Interest Expense (6% of Debt)		$ (1.08)
Net Profit Before Taxes		$ 12.92
Taxes (38%)		$ (4.91)
Net Profit After Taxes		$ 8.01
Debt to Equity Ratio		0.327
Return on Equity		14.56%

Based on these numbers, calculate:

A) Profits from Operations Up 30%

B) Profits from Operations Down 40%

C) Comment on performance of the company across the various capital structures at differing levels of profit and choose which is better.