A Firm with $600,000 Fixed Costs and $200,000 Depreciation Is

question 61

Multiple Choice

A firm with $600,000 fixed costs and $200,000 depreciation is expected to produce $225,000 in profits.What is its DOL?

• A) 3.56
• B) 3.67
• C) 4.56
• D) 4.67

---

Definitions:

Dividend

A portion of a company's earnings that is paid to shareholders, usually on a regular basis.

Nominal Rate

The officially declared or promoted rate of interest for a loan or investment, excluding the effects of compounding or any associated fees.

Loan

A borrowed sum of money that is expected to be paid back with interest.

Investment

Distributing capital or resources with the goal of achieving financial gain or income.