What Is the Fixed-Cost Expenditure for a Firm with a DOL

question 25

Multiple Choice

What is the fixed-cost expenditure for a firm with a DOL of 4.5 that generates pretax profits of $1 million and has $600,000 in depreciation expense?

• A)$1.1 million
• B)$2.1 million
• C)$2.9 million
• D)$3.9 million DOL = 1 +
• 4)5 = 1 +
• 3)5 =
• $3)5 million = fixed costs + $600,000