Get correct answer general accounting Modern Artifacts can produce keepsakes that will be sold for $40each. Nondepreciation fixed costs are $600 per year, and variablecosts are $30 per unit. The initial investment of $1,800 will bedepreciated straight-line over its useful life of 6 years to a final valueof zero, and the discount rate is 8%.What is the degree of operating leverage of Modern Artifacts whensales are $4,000? (Do not round intermediate calculations. Roundyour answer to 2 decimal places.)

Step 1: Define Financial and Operating LeverageBoth financial and operating leverage increase the…

Answered: Modern Artifacts can produce keepsakes…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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Modern Artifacts can produce keepsakes that will be sold for $120 each. Nondepreciation fixed costs are $1,800 per year, and variable costs are $70 per unit. The initial investment of $5,400 will be depreciated straight-line over its useful life of 6 years to a final value of zero, and the discount rate is 18%. a. What is the degree of operating leverage of Modern Artifacts when sales are $7,440? b. What is the degree of operating leverage when sales are $12,000?
Modern Artifacts can produce keepsakes that will be sold for $240 each. Nondepreciation fixed costs are $3,600 per year, and variable costs are $140 per unit. The initial investment of $10,800 will be depreciated straight-line over its useful life of 3 years to a final value of zero, and the discount rate is 8%. a. What is the degree of operating leverage of Modern Artifacts when sales are $17,760? (Do not round Intermedlate calculatilons. Round your answer to 2 decimal places.) Degree of operating leverage b. What is the degree of operating leverage when sales are $35.280? (Do not round Intermedlate calculations. Round your answer to 2 decimal places.) Degree of operating leverage c. Why is operating leverage different at these two levels of sales? Degree of operating leverage is when profits are
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Modern Artifacts can produce keepsakes that will be sold for $270 each. Nondepreciation fixed costs are $3,200 per year, and variable costs are $190 per unit. The initial investment of $9,600 will be depreciated straight-line over its useful life of 8 years to a final value of zero, and the discount rate is 16%. a.What is the degree of operating leverage of Modern Artifacts when sales are $16,740? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the degree of operating leverage when sales are $28,890? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Why is operating leverage different at these two levels of sales? Degree of operating leverage is _____ when profits are _____.
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