CASE 1(40 points) Ramon Cabrera would like to invest in an air compressor business. In...
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CASE 1(40 points) Ramon Cabrera would like to invest in an air compressor business. In line with this, he hired a financial analysis to forecast various leverages to help M. Cabrera decide which option would be better. In both options, the product would be sold at a selling price of $1.000.00 in a 5-year period. Written below are the details of the investments: Option A Variable Cost per unit: Fixed Cost: Interest Expense: 80% of the Selling Price $ 200,000.00 20,000.00 Option B Variable Cost per unit: Fixed Cost: interest Expense: 50% of the Selling Price $1,500,000.00 150,000.00 Assume that on YEAR 1 the company sels 1.000 units and the quantity of goods sold doubles every year. Assume that the tax rate is 30% 1. Compute for each year's Sales, Earnings Before Interest and Taxes (EBIT) and Earnings Per Share (EPS) per option." Your answer 2. Como
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