What is the degree of operating leverage of the project

Assignment Help Financial Accounting
Reference no: EM132906725

A project has fixed costs of $1,800 per year, depreciation charges of $200 a year, annual revenue of $7,200, and variable costs equal to two-thirds of revenues.

Problem a. If sales increase by 8%, what will be the percentage increase in pretax profits? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Problem b. What is the degree of operating leverage of this project? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM132906725

Questions Cloud

What is the future value years of an ordinary annuity : What is the future value in 27 years of an ordinary annuity cash flow of $704 every quarter of a year at the end of the period, at an annual interest rate.
How poorly they are performing in areas of profit : Compare and contrast the two companies in terms of how well or how poorly they are performing in the areas of profit, debt, and asset turnover.
Determine what is the net present value of the project : After 4 years, the equipment will have an economic and book value of zero. The firm's tax rate is 21%. What is the net present value of the project?
What is the npv of buying the new lathe : What is the NPV of buying the new lathe? Ilana Industries Inc. needs a new lathe. It can buy a new high-speed lathe for $1.2 million.
What is the degree of operating leverage of the project : What is the degree of operating leverage of this project? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Developments in field of information technology : Discuss what capabilities are needed for populations to be successfully managed through existing and newer developments in the field of Information Technology.
At what price per jar would project npv equal zero : At what price per jar would project NPV equal zero? (Enter your answer in dollars not in millions. Do not round intermediate calculations.)
Manufacturing and distribution in another country : You represent a large U.S. corporation that manufactures rubber tires, and you want to begin manufacturing and distribution in another country
What will be the future values of the lump sum option : Assume his required rate of return is 5%, what will be the future values of the lump sum option and the annuity option in 30 years, respectively?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Compute the payables turnover and days payable for cvs

Compute the payables turnover and days' payable for CVS and Walgreens in 2010 and 2011. In 2009, CVS had accounts payable of $3,560 million, and in 2010, its merchandise inventory decreased by $352.

  Explain how they contributed toward the financial reporting

Describe the failures in internal controls of Royal Dutch Shell plc and explain how they contributed toward the financial reporting problems at Shell.

  What amount is the deferred rent liability on the first day

A company enters into a three-year operating lease agreement effective January, What amount, if any, is the deferred rent liability on the first day of year 2?

  Find the amount that should be reported as current assets

All adjusting entries have been made. Find the amount that should be reported as current assets on Paynter Corporation's balance sheet

  Prepare two partial balance sheets in good form

Entity A is authorized to issue 30 million common shares and has no treasury stock. The stockholders' equity section of its balance sheet consists of common stock ($5 par) $5,000,000 and retained earnings $24,000,000. Prepare two partial balance shee..

  What is estimated required rate of return on Woidtke stock

The dividend is expected to grow forever at a constant rate of 10% a year. What is estimated required rate of return on Woidtke stock

  What the next journal entry to record the interest payment

Interest is paid semiannually. The next journal entry to record the interest payment and amortization includes debit to interest expense? for

  Financial statements were bad debt expenses

Shear, Inc. began operations in year 1. Included in Shear's year 1 financial statements were bad debt expenses of $1,400 and profit from an installment sale

  What rate of return does the investor expect to receive

What rate of return does the investor expect to receive on this stock if he or she purchases the stock today? Round the answer to two decimal places

  Prepare general journal entries assuming periodic inventory

In two columns (side-by-side), prepare general journal entries assuming a periodic inventory system is used and a perpetual inventory system is used

  What is the weighted average cost of capital

What is the weighted average cost of capital for each company? Which company will have a lower stock price? Two public companies (Jack Co. and Jill Co.) operate

  What is the firm cost of preferred stock

The current price of the firm's preferred stock (10%, £100 par value, perpetual quarterly dividend) is £113.10. What is the firm cost of preferred stock

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd