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Problem 5-20 Combining operating and financial leverage (L05-5) 0 Sinclair Manufacturing and Boswell Brothers Inc....

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Problem 5-20 Combining operating and financial leverage (L05-5) 0 Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the homebuilding Industry. Their financial Information is as follows: Sinclair Boswell Capital Structure Debt 11% $ 220,000 Coon stock, $10 per share 480.000 $1,200,000 Total $1,200,000 $1,200,000 Common shares 40,000 120.000 Operating Plan Sales (52,000 units at $20 each) $1,000,000 $1,000,000 Variable costs 832.000 Fixed costs 520,000 302,000 Earnings before Interest and taxes (EBIT) $ 200,000 218,000 The variable costs for Sinclair are $16 per unit compared to $10 per unit for Boswelt. 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 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 Hoverage c. In part b. If sales double, by what percentage will earnings per share (EPS) increase? (Round your answer to the nearest whole percent.) EPS will increase by

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