Ralph Is in Charge of a Project That Has a Degree

question 139

Multiple Choice

Ralph is in charge of a project that has a degree of operating leverage of 2.5. What will happen to the operating cash flows if Ralph increases the number of units sold by 5 percent?

• A) increase by 2 percent
• B) increase by 12.5 percent
• C) increase by 50 percent
• D) decrease by 12.5 percent
• E) decrease by 50 percent

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