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Mathematics, 02.07.2019 17:20 semily74

If we consider the effect of taxes, then the degree of operating leverage can be written as: dol = 1 + [fc × (1 – tc) – tc × d]/ocf consider a project to supply detroit with 27,000 tons of machine screws annually for automobile production. you will need an initial $4,600,000 investment in threading equipment to get the project started; the project will last for 5 years. the accounting department estimates that annual fixed costs will be $1,100,000 and that variable costs should be $205 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the 5-year project life. it also estimates a salvage value of $475,000 after dismantling costs. the marketing department estimates that the automakers will let the contract at a selling price of $308 per ton. the engineering department estimates you will need an initial net working capital investment of $440,000. you require a return of 12 percent and face a tax rate of 23. a. what is the percentage change in ocf if the units sold changes to 28,000? (do not round intermediate calculations and enter your answer as a percent rounded to 4 decimal places, e. g., 32.1616.) b. what is the dol at the base-case level of output

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