OceanGate sells external hard drives for $152 each. Its total fixed costs are $48 million, and its variable costs per unit are $106. The corporate tax rate is 45%. If the economy is strong, the firm will sell 4 million drives, but if there is a recession, it will sell only half as many.
a. What will be the percentage decline in sales if the economy enters a recession? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)
b. What will be the percentage decline in profits if the economy enters a recession? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)
c. Calculate the operating leverage of this firm? (Round your answer to 2 decimal places.)