Consider a four-year project with the following information: initial fixed asset investment $560,000; straight-line depreciation to zero over the four-year life; zero salvage value; $38; variable costs = $26; fixed costs = $235,000; quantity sold = 82,000 units; tax rate = 25 percent. price a. What is the degree of operating leverage at the given level of output? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) b. What is the degree of operating leverage at the accounting break-even level of output? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) B Degree of operating leverage b. Degree of operating leverage
Consider a four-year project with the following information: initial fixed asset investment $560,000; straight-line depreciation to zero over the four-year life; zero salvage value; $38; variable costs = $26; fixed costs = $235,000; quantity sold = 82,000 units; tax rate = 25 percent. price a. What is the degree of operating leverage at the given level of output? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) b. What is the degree of operating leverage at the accounting break-even level of output? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) B Degree of operating leverage b. Degree of operating leverage
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Consider a four-year project with the following information: initial fixed asset investment
$560,000; straight-line depreciation to zero over the four-year life; zero salvage value;
$38; variable costs = $26; fixed costs = $235,000; quantity sold = 82,000 units;
tax rate = 25 percent.
price
a. What is the degree of operating leverage at the given level of output? (Do not round
intermediate calculations and round your answer to 4 decimal places, e.g.,
32.1616.)
b. What is the degree of operating leverage at the accounting break-even level of
output? (Do not round intermediate calculations and round your answer to 4
decimal places, e.g., 32.1616.)
B
Degree of operating leverage
b. Degree of operating leverage
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