Question: Consider a four-year project with the following information: Initial fixed asset investment = $655,000; 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 =

$655,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $28; variable costs - $16; fixed costs = $245,000; quantity sold = 61,000 units; tax rate = 21 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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