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

question 39

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

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Definitions:

Least Squares Line

A line of best fit determined by minimizing the sum of the squares of the vertical deviations from each data point to the line.

Weight

A measurement of the importance or influence that a specific element has within a set of data or model.

Height

A measurement of how tall an individual or structure is, typically measured from base to top.

Method Of Least Squares

A mathematical procedure for finding the best-fitting curve to a given set of points by minimizing the sum of the squares of the offsets ("the residuals") of the points from the curve.