1. Two firms with the same operating leverage, business risk, and probability distribution of EBIT. Only differ with respect to their use of debt (capital structure)
Firm U Firm L
No debt $10.000 of 12% debt
$20.000 in assets $20.000 in assets
40% tax rate 40% tax rate
2. Company MPY sales forecasting Rp.300,000 (30,000 units) VC=Rp.6, FC=Rp.100,000
What happens to EBIT if realized sales increase 20% from the estimate?
3. Given: P = Rp. 10, VC = Rp. 6, F = Rp. 100,000, what is the DOL at sales of Rp. 300,000 or at Q = 30,000
4. Bob and Jim are both looking to purchase the same house that costs $500,000. Bob plans to make a 10% down payment and take a $450,000 mortgage for the rest of the payment (mortgage cost is 5% annually). Jim wants to purchase the house for $500,000 cash today. Who will realize a higher return on investment if they sell the house for $550,000 a year from today?
5. PT Maju Bersama currently utilizes debt of Rp200,000,000 and pays 14%/year interest.
Preferred stock of 10,000 shares and pays a fixed dividend of Rp500/sheet. In addition, the company has 40,000 shares of common stock and taxes at 50%.
Required:
a. What is the DFL when the company expects to sell 400,000 units?
b. If the company expects to sell 500,000 units next year, what is the effect of the change in EBIT on EPS?
6. PT Bersama Maju, which specializes in motorcycle components, expects to achieve sales of 400,000 units next year. The selling price of the product is Rp4,000/unit. The fixed cost for the year is Rp300,000,000, while the variable cost per unit (estimated to be constant) is Rp3,000.
Required:
a. What is the DOL on sales of 400,000 units?
b. If the company expects to sell 500,000 units next year, what is the effect of the change in sales on EBIT?
