Business, 07.03.2020 02:23 umchriis

Consider two firms. Firm A has a DOL of 3.0, an expected ROE of 9% with a standard deviation of 6%, and an EBIT of $10,000 when sales are 60,000 units. Firm B has a DOL of 6.0, an expected ROE of 12% with a standard deviation of 15%, and an EBIT of $10,000 when sales are 60,000 units. On the same graph, depict EBIT as a function of sales for the two firms. On a separate graph, depict the distribution of ROE for the two firms. Calculate the coefficient of variation for both firms.

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Consider two firms. Firm A has a DOL of 3.0, an expected ROE of 9% with a standard deviation of 6%,...

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