Illinois Tool Company's (ITC)fixed operating costs are $1,260,000 and its variable cost ratio (i.e., variable costs as a fraction of sales)is 0.70. The firm's debt consists of a $6,000,000 bond issue (par value)which pays a coupon rate of 9%. Sales are $9 million per year. What is ITC's degree of financial leverage?
A)1.20
B)1.875
C)3.0
D)1.60

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The Answer of Illinois Tool Company's (ITC)fixed operating costs are $1,260,000 and its variable cost ratio (i.e., variable costs as a fraction of sales)is 0.70. The firm's debt consists of a $6,000,000 bond issue (par value)which pays a coupon rate of 9%. Sales are $9 million per year. What is ITC's degree of financial leverage?
A)1.20
B)1.875
C)3.0
D)1.60

Illinois Tool Company's (ITC)fixed Operating Costs Are $1,260,000 and Its