Question: 5- (2 points) Consider a three-year project with the following information: initial fixed asset investment = $360,000; straight-line depreciation to zero over the three year
5- (2 points) Consider a three-year project with the following information: initial fixed asset investment = $360,000; straight-line depreciation to zero over the three year life; zero salvage value; price = $23 per unit; variable cost = $15 per unit; fixed costs = $105,000; quantity sold = 110,000 units; tax rate = 31.5%. What is the degree of operating leverage at the given level of output?
A) 1.18 B) 1.26 C) 1.30 D) 1.50 E) 1.92
6- A project has a four-year life and an initial cost of $52,000. This project has been assigned a 13% required rate of return. The selling price per unit has been set at $36. Annual fixed costs are $75,000 with variable costs of $31 per unit. What is the financial break-even quantity if taxes are ignored?
A) 11,603 units B) 15,986 units C) 18,497 units D) 22,530 units E) 26,315 units
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