URGENT PLEASE ANSWER Part 1 20 Marks After winning a reasonable amount from the lottery, you decided to fulfill your tee

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URGENT PLEASE ANSWER
Part 1 20 Marks
After winning a reasonable amount from the lottery, you decided
to fulfill your teenage dream. You are considering the possibility
of opening your own specialized ice fishing specialty shop. You
initial forecast indicates that the first-year sales will be
$600,000, and your variable costs will be approximately 50% of
sales. The fixed costs in the first year will be $250,000. In
addition to your contribution, you are looking to raise
$800,000
Currently, you are considering two options of financing the
dream:
Option 1 60% equity financing and 40% debt at
14%, or
Option 2 100% equity financing from friends and
family. for $10 per share.
Required
Part a
Compute his break-even point in dollars.
Part b
Calculate the Degree of Operating Leverage at the expected
first-year sales volume
Part c
Calculate the Degree of Financial Leverage and the Degree of
Combined Leverage under each of the possible financing plans.
Part d
Explain the implications of your answers if the machine shop
business is highly cyclic
Part B 5 Marks
Bob and Jim are both looking to purchase the same house that
costs $500,000. Bob plans to make a 10% down payment and take a
$450,000 mortgage for the rest of the payment (mortgage cost is 5%
annually). Jim wants to purchase the house for $500,000 cash
today.
Required
Who will realize a higher return on investment if they sell the
house for $550,000 a year from today? Show your calculations