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Two firms, Green and Red, from the same industry reported thefollowing income statements.Green, Inc.20182019Sales$110,000$150,000–COGS and Other Variable Operating Costs- 77,000- 105,000–Fixed Operating Costs- 15,000- 15,000EBIT18,00030,000–Interest- 0- 0EBT18,00030,000–Taxes- 5,400- 9,000Net Income$ 12,600$ 21,000Red, Inc.20182019Sales$110,000$150,000–COGS and Other Variable Operating Costs- 66,000- 90,000-Fixed Operating Costs- 25,000- 25,000EBIT19,00035,000–Interest- 5,000- 5,000EBT14,00030,000–Taxes- 4,200- 9,000Net Income$ 9,800$ 21,000 Required: Calculate the operating leverage for the twofirms (using 2018 sales as the base) and then compare the leverageof all types used by the two firms and discuss its impact on thefirms' cost of capital.