Question: P 9-2 A firm has earnings before interest and tax of $1,000,000, interest of $200,000, and net income of $400,000 in Year 1. Required a.

P 9-2 A firm has earnings before interest and tax of $1,000,000, interest of $200,000, and net income of $400,000 in Year 1. Required a. Calculate the degree of financial leverage in base Year 1. b. If earnings before interest and tax increase by 10% in Year 2, what will be the new level of earnings, assuming the same tax rate as in Year 1? c. If earnings before interest and tax decrease to $800,000 in Year 2, what will be the new level of earnings, assuming the same tax rate as in Year 1

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Managerial Accounting 14th Edition by McGraw Hill Education