5. Jara Corporation's most recently sold was 300,000 units at Tk.18 each; its variable operating costs are Tk.8.00 per unit and its fixed operating costs are Tk. 450,000. Annual interest charges are total Tk.170,000. It has currently 41,000 shares of common stock outstanding. Assume that the firm is subject to a 27.5% tax rate. a) At what level of sales (in units) would the firm break even on operations (that is, EBIT Tk.0)? (1.5) b) Calculate the firm's earnings per share (EPS) in tabular form at: 1) the current level of sales and 2) at 350,000-unit level of sales. (4) c) Using the current level of sales as a base, calculate the firm's degree of operating leverage (DOL). Provide Comment. (1.5) d) Using the EBIT associated with the current level of sales as a base, calculate the firm's degree of financial leverage (DFL). Provide Comment. (1.5)
e) Calculate Degree of Total Leverage at current sales level. Provide Comment.
