Ch $12$ Assignment

ATech has fixed costs of $$14$ million and profits of $$7$ million. Its competilor, $Z$ lech, is ioughly the same stre and Eis your earneds tre

$10$ same profits, $$7$ million. But it operales with higher fioed costs of $$15$ million and lower variatile couts.

points

Required:

What is the degree of operating leverage $($DOL$)$ for each compary? $($Defined here as $1$ Foed costs if Profit$)$

ellook

Notes Do not round intermediate colculations. Round your answers to $2$ decimal places.

P$$

eneferences

$\backslash$table$[[$Degree of aperating heverape for Alech$],[$Degree of operating liverage for Zloch$]]$

a$.$ Which firm would you expect to have profits that are more sensitive to the state of the economy?

ATech

Zlech

b$.$ Which firm would you expect to have the higher stock market beta?

ATech

ZTech

Prex

$7$ of $10$

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