You Are in Charge of a Project That Has a Degree

question 59

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 4 percent?

• A)15.84 percent decrease
• B)2.27 percent decrease
• C)no change
• D)2.27 percent increase
• E)10.56 percent increase

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Definitions:

Legal Value

Refers to something of worth that is recognized by law, often in the context of contracts where it pertains to the exchange of goods, services, or promises that are enforceable.

Preexisting Duty

An obligation that one party already owes to another under the law or an existing contract, which cannot serve as new consideration for a new contract.

Preexisting Duty Rule

A legal principle stating that an agreement to do something that one is already legally obligated to do is not valid consideration for a new contract.

Superlative Work

Work of the highest quality or degree, demonstrating excellence or outstanding performance.