A Project Has the Following Estimated Data: Price = $74

question 56

Multiple Choice

A project has the following estimated data: price = $74 per unit; variable costs = $39.22 per unit; fixed costs = $6,500; required return = 8 percent; initial investment = $8,000; life = 4 years.Ignore the effect of taxes.What is the degree of operating leverage at the financial break-even level of output?

• A)2.716
• B)3.691
• C)4.528
• D)6.003
• E)7.337

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Definitions:

Challenging

Presenting difficulties or demanding effort to be undertaken successfully, often leading to personal growth or development.

Rewarding

Providing satisfaction, pleasure, or a positive outcome that reinforces behavior or effort.

Expectations

Beliefs or hopes concerning what is possible or likely to happen in the future.

Equity

In a social context, it refers to fairness and justice in the distribution of resources and opportunities among all individuals.