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Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the homebuilding industry. Their financial information is as follows:SinclairBoswellCapital StructureDebt @ 11%$1,440,0000Common stock, $10 per share960,000$2,400,000Total$2,400,000$2,400,000Common shares96,000240,000Operating Plan:Sales (64,000 units at $20 each)$1,280,000$1,280,000Variable costs1,024,000640,000Fixed costs0314,000Earnings before interest and taxes (EBIT)$256,000$326,000The variable costs for Sinclair are $16 per unit compared to $10 per unit for Boswell.a.If you combine Sinclair’s capital structure with Boswell’s operating plan, what is the degree of combined leverage? (Round your answer to 2 decimal places.)Degree of combined leverage[removed]b.If you combine Boswell’s capital structure with Sinclair’s operating plan, what is the degree of combined leverage? (Round your answer to the nearest whole number.)Degree of combined leverage[removed]c.In part b, if sales double, by what percentage will EPS increase? (Round your answer to the nearest whole percent.)EPS will increase by[removed] %HintsReferenceseBook & Resources
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