A project has fixed costs of $ 1,000 per year, depreciation charges of $500 a year, annual
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A project has fixed costs of $ 1,000 per year, depreciation charges of $500 a year, annual revenue of $6,000, and variable costs equal to two-thirds of revenues.
a. If sales increase by 10%, what will be the increase in pretax profits?
b. What is the degree of operating leverage of this project?
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a Pretax profits currently equal Revenue variable costs fixed costs depre...View the full answer
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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