1.) It is December 31. Last year, Carter Chemical Co. had sales of $16,000,000, and it...

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1.) It is December 31. Last year, Carter Chemical Co. had salesof $16,000,000, and it forecasts that next year’s sales will be$14,880,000. Its fixed costs have been and are expected to continueto be $6,400,000, and its variable cost ratio is 12.50%. Carter’scapital structure consists of a $13.5 million bank loan, on whichit pays an interest rate of 9%, and 250,000 shares of commonequity. The company’s profits are taxed at a marginal rate of40%.
Given this data, complete the following sentences:
• The percentage change in the company’s sales is _______(-8.4% / -7% / -6.3)
• The percentage change in Carter’s EBIT is _(-10.31% / -12.89% / -18.05%)
• The degree of operating leverage (DOL) at $14,880,000 is_________ (219.13 / 1.84 / 0.54) .
2.) There are several ways to use and interpret a firm’s DOLvalue. Consider the following statement and indicate whether itaccurately reflects the meaning or an appropriate use of a firm’sDOL value.
At sales of $24 million, Firm X’s DOL is 1.75, and Firm C’s DOLis 6.50. Firm C exhibits a lower level of business risk than FirmX. (True / False)

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1.) It is December 31. Last year, Carter Chemical Co. had salesof $16,000,000, and it forecasts that next year’s sales will be$14,880,000. Its fixed costs have been and are expected to continueto be $6,400,000, and its variable cost ratio is 12.50%. Carter’scapital structure consists of a $13.5 million bank loan, on whichit pays an interest rate of 9%, and 250,000 shares of commonequity. The company’s profits are taxed at a marginal rate of40%.Given this data, complete the following sentences:•The percentage change in the company’s sales is _______________(-8.4% / -7% / -6.3)•The percentage change in Carter’s EBIT is _______________(-10.31% / -12.89% / -18.05%)•The degree of operating leverage (DOL) at $14,880,000 is_______________ (219.13 / 1.84 / 0.54) .2.) There are several ways to use and interpret a firm’s DOLvalue. Consider the following statement and indicate whether itaccurately reflects the meaning or an appropriate use of a firm’sDOL value.At sales of $24 million, Firm X’s DOL is 1.75, and Firm C’s DOLis 6.50. Firm C exhibits a lower level of business risk than FirmX. (True / False)

•	The percentage change in the company’s sales is _______________(-8.4% / -7% / -6.3)
•	The percentage change in Carter’s EBIT is _______________(-10.31% / -12.89% / -18.05%)
•	The degree of operating leverage (DOL) at $14,880,000 is_______________ (219.13 / 1.84 / 0.54) .