We are evaluating a project that costs $903,000, has an 11-year life, and has no

Question

We are evaluating a project that costs $903,000, has an 11-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 104,000 units per year. Price per unit is $35, variable cost per unit is $21, and fixed costs are $908,418 per year. The tax rate is 32 percent, and we require a 19 percent return on this project.

(Do not round your intermediate calculations.)

(a) What is the degree of operating leverage at the accounting break-even point?

      Multiple Choice: 12.166 / 11.966 / 12.066 / 1.19 / 1.091

Thanks!

Explanation / Answer

12.066

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