TCA Cable Has Fixed Operating Costs of $2

question 3

Multiple Choice

TCA Cable has fixed operating costs of $2.6 million, and its variable cost ratio is 0.30. TCA has $4.0 million in bonds outstanding with a coupon interest rate of 12%. TCA has 1.0 million common shares and 1,000,000 shares of $1.75 preferred stock outstanding. Total revenues for TCA Cable are $14.2 million. If TCA has a marginal tax rate of 40%, what is its degree of combined leverage?

• A) 2.1
• B) 1.0
• C) 1.9
• D) 2.5

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Definitions:

Sensory Information

Data received by sensory organs like the eyes, ears, skin, nose, and tongue, which is then interpreted by the brain to perceive the environment.

Motor Information

Data related to or involving the control and execution of physical movements by the nervous system and muscles.

Reflexive Behaviors

Automatic, involuntary responses to stimuli, governed by the nervous system without conscious brain involvement.

Motor Homunculus

A visual representation of the primary motor cortex, illustrating the body parts that correspond to specific areas of the brain responsible for motor control.