A Firm with $800,000 of Fixed Costs Including $200,000 of Depreciation

question 30

Multiple Choice

A firm with $800,000 of fixed costs including $200,000 of 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

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Definitions:

Debentures

A type of long-term debt instrument that is not secured by physical assets or collateral but based on the issuer's creditworthiness and reputation.

Dividends

Profits of a corporation that are distributed in the form of cash payments to stockholders.