You Are in Charge of a Project That Has a Degree

question 74

Multiple Choice

You are in charge of a project that has a degree of operating leverage of 2.64. What will happen to the operating cash flows if the number of units you sell increase by 6 percent?

• A)15.84 percent decrease
• B)2.27 percent decrease
• C)no change
• D)2.27 percent increase
• E)15.84 percent increase

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Definitions:

Gift

A transfer of property or assets from one individual to another without the expectation of payment or anything in return.

Landscape Business

A business involved in modifying the visible features of an area of land, including flora, terrain shape, and structures.

Section 1231 Gain

relates to a gain from the sale or exchange of certain types of business property, which may be treated as either capital or ordinary gain for tax purposes.

Capital Gain

The profit earned from the sale of an asset or investment which exceeds its purchase price.