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Calculate Operating Profit ratio

An unlevered firm has a cost of capital of 15% and earnings before interest and taxes of $128025 A levered firm with the same operations and assets has both a book value and a face value of debt of $764245 with a 9% annual coupon The applicable tax rate is 35%

What is the value of the levered firm? (Round answer to 0 decimal places, do not round intermediate calculations)

a) What is meant by ‘Profitability’ of business?

(b) From the following information calculate Operating Profit ratio:Opening Stock Rs 10,000; Purchases Rs 1,20,000; Revenue from operations Rs 4,00,000;Purchase Returns Rs 5,000; Returns from Revenue from operations Rs 15,000; SellingExpenses Rs 70,000; Administrative Expenses Rs 40,000; Closing Stock Rs 60,000.


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