You are in charge of a project that has a degree of operating leverage of 2.64.What will happen to the operating cash flows if the number of units you sell increase by 4 percent?
A)15.84 percent decrease
B)2.27 percent decrease
C)no change
D)2.27 percent increase
E)10.56 percent increase

Question

Quizplus · Accepted Answer

Percentage change in OCF = 2.64 × 0.04 = 10.56 percent increase

You Are in Charge of a Project That Has a Degree