Corporate Finance Q106
106The following data is available for Ejaz Business:
| Number of units sold | 1 million |
| Sales price per unit | Rs. 100 |
| Variable cost per unit | Rs. 20 |
| Fixed operating cost | 5 million |
| Fixed financing cost | 1 million |
The degree of total leverage for the companyis closest to:
- Option : B
- Explanation : DTL = [Q(P - V)] / [Q(P - V) - F - C] = [1 million (Rs.100 – Rs.20)] / [1 million (Rs.100 – Rs.20) – 5 million – 1 million] = 1.08.
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