Operating Leverage and Taxes shown that if we consider the effect of taxes, the degree of operating
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Operating Leverage and Taxes shown that if we consider the effect of taxes, the degree of operating leverage can be written as: DOL = 1 + [FC x (1 – T) – T x D] / OCF. Notice that this reduces to our previous result if T = 0, can you interpret this in words?
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The DOL is expressed as DOL OCF Q DOL OCF 1 OCF 0 OCF 0 Q 1 Q 0 Q 0 The OCF for the initial ...View the full answer
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
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