The fiXed Costs of a Project Are $6,000

question 271

Multiple Choice

The fixed costs of a project are $6,000. The depreciation expense is $4,500 and the operating cash flow is $18,000. What is the degree of operating leverage for this project?

• A) 1.33
• B) 1.44
• C) 1.50
• D) 2.25
• E) 3.00

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Definitions:

Ex-Rights

A status of a stock that signifies it is being traded without the right to receive the most recent dividend payment or issuance.

Holder-Of-Record Date

The specified date on which the shareholders of record are entitled to receive a forthcoming dividend or participate in corporate events.

Announcement Date

The specific date on which a company releases significant information to the public, often regarding earnings, product launches, or other major events.

Firm-Commitment Basis

An underwriting process where the underwriter buys the entire issue of securities from the issuer and sells them to investors, assuming full financial risk.