Consider a four-year project with the following Information: Initlal fixed asset Investment = $590,000; stralght-line depreclation to zero over the four-year life; zero salvage value, price = $44; varlable costs = $35; fixed costs $265,000; quantity sold = 100,000 units; tax rate = 21 percent. !3! %3D %3D %3D a. What Is the degree of operating leverage at the given level of output? (Do not round Intermedlate calculations and round your answer to 4 declimal places, e.g., 32.1616.) b. What Is the degree of operating leverage at the accounting break-even level of output? (Do not round Intermedlate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Degree of operating leverage a. b. Degree of operating leverage
Consider a four-year project with the following Information: Initlal fixed asset Investment = $590,000; stralght-line depreclation to zero over the four-year life; zero salvage value, price = $44; varlable costs = $35; fixed costs $265,000; quantity sold = 100,000 units; tax rate = 21 percent. !3! %3D %3D %3D a. What Is the degree of operating leverage at the given level of output? (Do not round Intermedlate calculations and round your answer to 4 declimal places, e.g., 32.1616.) b. What Is the degree of operating leverage at the accounting break-even level of output? (Do not round Intermedlate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Degree of operating leverage a. b. Degree of operating leverage
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 15P
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Transcribed Image Text:Consider a four-year project with the following Informatlon: Initlal fixed asset Investment
$590,000, stralght-line depreclation to zero over the four-year life; zero salvage value,
price $44; varlable costs = $35, fixed costs = $265,000; quantity sold = 100,000 units,
tax rate = 21 percent.
%3D
%3D
%3D
%3D
a. What Is the degree of operating leverage at the glven level of output? (Do not round
Intermedlate 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 Inteermediate calculations and round your answer to 4
declmal places, e.g., 32.1616.)
a.
Degree of operating leverage
b. Degree
of operating leverage
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