16-11
Mercury Air’s debt consists of $50,000 in accountspayable, $100,000 in 10 percent notes payable. And $240,000 in 8percent bonds. Mercury has no preferred stock. If its marginal taxrate is 35 percent, what is Mercury’s financial breakevenpoint?
16-14
Stumpy’s Gator Farm forecasts that its net income willbe $46,800 this year. The firm’s marginal tax rate is 35 percent,and it must pay $36,000 interest on outstanding debt. Stumpy’s hasno preferred stock. What is the firm’s degree of financial leverage(DFL)?
