3.

A
Contribution Margin Selling Price per Unit-Variable Cost per Unit
16-11
₱ 5.00

4. D
Degree of Financial
Leverage EBIT/EBIT-Interest
200/(200-50)
1.33
5. B
Degree of Combined Quantity*(SP-VC)/Quantity*(SP-VC)-Fixed Cost-
Leverage Interest
200,000*(16-11)/200,000*(16-11)-800,000-50,000
1,000,000/150,000
6.67

6. C
Php 800,000/40 per
Alternative I: share
20,000
20,000 + 40,000
Total Shares 60,000
Alternative II: no new issued shares
Total Shares 40,000

7. B
90,000(face value) * 10%
Alternative I: (outstanding debt)
total interest obligation 9,000
800,000 shares * 12% (coupon
Alternative II: rate)
Total Shares 96,000
add: total interest
obligation 9,000
105,000
8. D
Indifference Level of EBIT (EBITe - Ie)*(1-T)/Se = (EBITd - Id)*(1-T)/Sd
(EBITe - Ie)/Se = (EBITd - Id)/Sd
(EBIT - P9,000)/ 60,000 = (EBIT - P105,000)/
40,000
(EBIT - P9,000)]/6 = (EBIT - P105,000)/4
4*(EBIT - P9,000) = 6*(EBIT - P105,000)