Show that if we consider the effect of taxes, the degree of operating leverage can be written
Question:
DOL = 1 + [FC × (1 -T ) - T ×D ]/OCF
Notice that this reduces to our previous result if T 5 0. Can you interpret this in words?
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Step by Step Answer:
The DOL is expressed as DOL D OCF D Q DOL OCF 1 OCF 0 OCF 0 Q 1 Q 0 Q 0 The OCF for the initial peri...View the full answer
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Related Book For 
Fundamentals of corporate finance
ISBN: 978-0078034633
10th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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