What is the fixed-cost expenditure for a firm with a DOL of 4.5 that generates pretax profits of $1 million and has $600,000 in depreciation expense?
A) $1.1 million
B) $2.1 million
C) $2.9 million
D)$3.9 million

Name: What is the fixed-cost expenditure for a firm with a DOL of 4.5 that generates pretax profits of $1 million and has $600,000 in depreciation expense? A) $1.1 million B) $2.1 million C) $2.9 million D)$3.9 million
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Quizplus · Accepted Answer

DOL= 4.5 = 1 + (FC + $600,000)/$1,000,000; FC = $2,900,000

What Is the Fixed-Cost Expenditure for a Firm with a DOL