Charlestown Marina's Forecasts Indicate That If Slip Rentals Equal $500,000

question 60

Multiple Choice

Charlestown Marina's forecasts indicate that if slip rentals equal $500,000, net operating income will be $25,000 and if rentals equal $525,000, net operating income will be $37,500. What is Charletown's degree of operating leverage?

• A) 2
• B) 10
• C) .05
• D) .10

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Definitions:

Interest Rate

The cost, in terms of a percentage of the principal, levied by a lender on a borrower for asset usage.

Supply of Loanable Funds

The supply of loanable funds is the total amount of capital available for borrowers to secure, typically originating from savings in the economy, and forming the basis for interest rates determination.

Interest Rate

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, per period of time.

Human Capital

The economic value of a worker's experience and skills, including education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.