Suppose That a Project Has a DOL = 0

question 21

Multiple Choice

Suppose that a project has a DOL = 0.75. If the quantity being produced increases from 96 to 100, what is the expected percentage change in operating cash flow?

• A) -2.5%
• B) 3.1%
• C) 4.2%
• D) 5.5%
• E) 6.2%

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Definitions:

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Acquiring And Disposing

The processes involved in obtaining and getting rid of assets, including purchasing or receiving assets and selling or disposing of them.

Products Or Services

The tangible items (products) and intangible activities (services) offered by a business to satisfy the needs or wants of its customers.

Financing Activities

Transactions and events where a company raises capital and repays investors, including issuing debt and equity as well as dividend payments.