Question
In: Finance
Consider a four-year project with the following information: initial fixed asset investment = $550,000; straight-line depreciation...
Consider a four-year project with the following information: initial fixed asset investment = $550,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $36; variable costs = $24; fixed costs = $225,000; quantity sold = 76,000 units; tax rate = 23 percent.
a. What is the degree of operating leverage at the given level of output? (Do not round intermediate 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 intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Consider a four-year project with the following information: initial fixed asset investment = $570,000; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $570,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $30; variable costs = $22; fixed costs = $210,000; quantity
sold = 87,000 units; tax rate = 22 percent. How sensitive is OCF to
changes in quantity sold? (Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)
Consider a four-year project with the following information: initial fixed asset investment = $600,000; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $600,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $35; variable costs = $28; fixed costs = $240,000; quantity
sold = 90,000 units; tax rate = 25 percent. How sensitive is OCF to
changes in quantity sold? (Do not round intermediate calculations
and round your answer to 2 decimal places)
change in OCF/change in Q = ?
Consider a four-year project with the following information: initial fixed asset investment = $480,000; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $480,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $32; variable costs = $22; fixed costs = $170,000; quantity
sold = 78,000 units; tax rate = 32 percent.
What is the degree of operating leverage at the given level of
output? (Do not round intermediate calculations. Round your answer
to 4 decimal places, e.g., 32.1616.) Degree of operating
leverage
What is the...
Consider a four-year project with the following information: initial fixed asset investment = $510,000; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $510,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $20; variable costs = $10; fixed costs = $150,000; quantity
sold = 81,000 units; tax rate = 34 percent.
What is the degree of operating leverage at the given level of
output? (Do not round intermediate calculations. Round your answer
to 4 decimal places, e.g., 32.1616.)
Degree of operating leverage
What is the...
Consider a four-year project with the following information: initial fixed asset investment = $625,000; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $625,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $51; variable costs = $39; fixed costs = $300,000; quantity
sold = 121,000 units; tax rate = 23 percent.
a.
What is the degree of operating leverage at the given level of
output? (Do not round intermediate calculations and round
your answer to 4 decimal places, e.g., 32.1616.)
b.
What is the...
Consider a four-year project with the following information: initial fixed asset investment = $450,000; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $450,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $26; variable costs = $16; fixed costs = $140,000; quantity
sold = 74,000 units; tax rate = 34 percent.
What is the degree of operating leverage at the given level of
output? (Do not round intermediate calculations. Round your answer
to 4 decimal places, e.g., 32.1616.) Degree of operating
leverage=
What is the...
Consider a four-year project with the following information: initial fixed asset investment = $630,000; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $630,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $52; variable costs = $40; fixed costs = $305,000; quantity
sold = 124,000 units; tax rate = 24 percent. a. What is the degree
of operating leverage at the given level of output? (Do not round
intermediate calculations and round your answer to 4 decimal
places, e.g., 32.1616.) b. What is the degree...
Consider a four-year project with the following information: initial fixed asset investment = $502325; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $502325; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $34; variable costs = $25; fixed costs = $183172; quantity
sold = 79567 units; tax rate = 36 percent. Calculate the
sensitivity of the OCF to changes in the quantity sold. [Hint:
Think of this as, "How much does OCF change if we can sell one more
unit each year?"] (Do not round...
Consider a four-year project with the following information: initial fixed asset investment = $600,000; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $600,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $46; variable costs = $36; fixed costs = $275,000; quantity
sold = 106,000 units; tax rate = 23 percent.
How sensitive is OCF to changes in quantity sold? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
Consider a four-year project with the following information: initial fixed asset investment = $560,000; straight-line depreciation...
Consider a four-year project with the following information:
initial fixed asset investment = $560,000; straight-line
depreciation to zero over the four-year life; zero salvage value;
price = $38; variable costs = $26; fixed costs = $235,000; quantity
sold = 82,000 units; tax rate = 25 percent.
a.
What is the degree of operating leverage at the given level of
output? (Do not round intermediate calculations and round
your answer to 4 decimal places, e.g., 32.1616.)
b.
What is the...
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