Question: Consider a four-year project with the following information: initial fixed asset investment = $470,000; straight-line depreciation to zero over the four-year life; zero salvage value;

Consider a four-year project with the following information: initial fixed asset investment = $470,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $30; variable costs = $20; fixed costs = $160,000; quantity sold = 77,000 units; tax rate = 30 percent.

What is the degree of operating leverage at the given level of output?

What is the degree of operating leverage at the accounting break-even level of output?

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