1. Besrand Boats (BB) expects this year's sales to be $150,000. BB's fixed operating costs equal $18,000 and its variable operating costs are 80 percent of sales. BB pays $8,000 interest on its debt and its marginal tax rate is 30 percent. (a) What are BB's DOL. DFL, and DTL? (b) If sales actually turn out to be $172,500, what will be BB's actual i) EBIT and (ii) net income? 2. Matchmaker Cards (MC) has $30 million in assets and EBIT equal to $3.5 million. If MC's debt ratio (D/TA) is 60 percent, the interest it pays on its debt is 11 percent and there will be 400,000 shares of stock outstanding, whereas if the debt ratio is 30 percent, interest is 7 percent and outstanding shares will equal 600,000. MC's marginal tax rate is 40 percent. Calculate MC's EPS and ROE for each capital structure (ROE = Net income/Equity). Which capital structure is better?