A project has the following estimated data: price = $74 per unit; variable costs = $39.22 per unit; fixed costs = $6,500; required return = 8 percent; initial investment = $8,000; life = 4 years.Ignore the effect of taxes.What is the degree of operating leverage at the financial break-even level of output?
A)2.716
B)3.691
C)4.528
D)6.003
E)7.337

Question

Quizplus · Accepted Answer

DOL = 1 + (6,500/$2,415.37) = 3.691

A Project Has the Following Estimated Data: Price = $74