What is degree of operating leverage of modern artifacts

Assignment Help Financial Management

Reference no: EM131973588

Modern artifacts can produce keepsakes that will be sold for $90 each. Nondepreciation fixed costs are $1,300 per year, and variable costs are $50 per unit. The initial investment of $3,900 will be depreciated straight line over its useful life of 5 years to a final value of zero, and the discount rate is 12%.

a. What is the degree of operating leverage of Modern Artifacts when sales are $4,950?

b. What is the degree of operating leverage when sales are $9,630?

c. Why is operating leverage different at these two levels of sales?

Reference no: EM131973588

Questions Cloud

Build can produce line of flexfuel cars : An auto plant that costs $200 million to build can produce a line of flexfuel cars that will produce cash flows with a present value of $280 million

Calculate the standard deviation of the stock returns : Calculate the standard deviation of the stock’s returns over the last 5 years.

Calculate the standard deviation of the stock returns : your investment earned you the following returns: 15%, -22%, 4%, and 41%. Calculate the standard deviation of the stock’s returns over the last 5 years.

What is the average cash flow : What is the average cash flow you will receive from the mine if it is always kept in operation and the silver always is sold in the year it is mined?

What is degree of operating leverage of modern artifacts : What is the degree of operating leverage of Modern Artifacts when sales are $4,950?

Describe what you did as a tutorial to share with other : Article is appropriate if you want to work on project like setting up your own cluster and you want to describe what you did as a tutorial to share with other.

What is the long-term expected inflation rate : what is the long-term expected inflation rate in each country if the multiplicative form of the Fisher model is used?

Popular destinations of tax havens for american firms : What are the popular destinations of tax havens for American firms? What potential consequences will such shift bring?

Loan and the borrower expected holding period : What is the Annual Percentage Rate (APR) on a $150,000, 30-year mortgage at 4.25 percent interest if the lender charges 3.0 points on the loan

User Account

All Pages