What is the firms degree of leverage

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Reference no: EM13814697

Consider the following project which costs $2,000 with a salvage value of zero in 4 years. The project will produce a new widget which will be sold for $135 and have variable costs of $95 per unit. The company has fixed costs of $3,000 and a required return on projects of 14.5%. If the company sells 200 units, what is the firm’s degree of leverage?

a. 2.4

b. 1.1

c. 2.9

d. 1.6

e. 1.9

Reference no: EM13814697

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