Alvarez Technologies Has Sales of $3,000,000

Multiple Choice

Alvarez Technologies has sales of $3,000,000. The company's fixed operating costs total $500,000 and its variable costs equal 60% of sales, so the company's current operating income is $700,000. The company's interest expense is
$500,000. What is the company's degree of total leverage (DTL) ?

A) 6.0000
B) 5.4150
C) 5.7000
D) 4.8870
E) 5.1443