The Fixed Costs of a Project Are $16,000

question 400

Multiple Choice

The fixed costs of a project are $16,000. The depreciation expense is $7,800 and the operating cash flow is $12,700. What is the degree of operating leverage for this project?

• A) 1.26
• B) 1.43
• C) 1.79
• D) 2.26
• E) 2.79

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Definitions:

Brokerage Houses

Financial institutions that facilitate the buying and selling of financial securities between a buyer and a seller.

Securities Exchange Act

A United States law that governs the trading of securities, such as stocks and bonds, to protect investors from fraud.

Securities Act

A law enacted to regulate the securities industry, ensuring transparency, fairness, and protection of investors by requiring full disclosure of financial information from companies offering securities for public sale.

Red-herring

A Red-herring is a distraction or misleading piece of information that diverts attention away from the main issue.