Modern Artifacts can produce keepsakes that will be sold for $100 each. Nondepreciation fixed costs are $1,100 per year, and variable costs are $74 per unit. The initial investment of $4,800 will be depreciated straight-line over its useful life of five years to a final value of zero, and the discount rate is 10%. a. What is the degree of operating leverage of Modern Artifacts when sales are $8,500? Note: Round your answer to 1 decimal place. b. What is the degree of operating leverage when sales are $14,500? Note: Round your answer to 1 decimal place.
Modern Artifacts can produce keepsakes that will be sold for $100 each. Nondepreciation fixed costs are $1,100 per year, and variable costs are $74 per unit. The initial investment of $4,800 will be depreciated straight-line over its useful life of five years to a final value of zero, and the discount rate is 10%. a. What is the degree of operating leverage of Modern Artifacts when sales are $8,500? Note: Round your answer to 1 decimal place. b. What is the degree of operating leverage when sales are $14,500? Note: Round your answer to 1 decimal place.
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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