Note : The Answers should be computerized ( Word Version ) or by Excel or Any Financial Program

Question E (4 Marks) Two firms, Sky and Sun, from the same industry reported the following income statements Calculate the operating leverage for the two firms (using 2017 sales as the base) and then compare the leverage of all types used by the two firms and discuss its impact on the firms' cost of capital. Sky, Inc. 2017 2018 S110,000 S150,000 77,000- 105,000 15,000 30,000 Sales -COGS and Other Variable Operating Costs -Fixed Operating Costs 15,000 18,000 EBIT -Interest EBT -laxes Net Income 30,000 9,000 S12,600 S21,000 18,000 5,400 2017 Sun, Inc. Sales -COGS and Other Variable Operating Costs Fixed Operating Costs EBIT -Interest EBT -laxes Net Income 2018 S110,000 S150,000 90.000 25,000 35,000 5,000 30,000 9,000 S 9,800 S21,000 66.000 25,000 19,000 5,000 14,000 - 4,200