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IAU Finance Leverage and Capital Structure Worksheet

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Ch.4 Leverage & Capital Structure

Tri-Star Productions, Inc. is evaluating two different operating structures which are described below. The firm has annual interest expense of $250, common shares outstanding of 1,000, and a tax rate of 40 percent.

Fixed
Costs

Price
per Unit

Variable Cost
per Unit

operating structure 1:

$500

$1

$0.75

– calculate: