Question
OceanGate sells external hard drives for $260 each. Its total fixed costs are $30 million, and its variable costs per unit are $210. The corporate
OceanGate sells external hard drives for $260 each. Its total fixed costs are $30 million, and its variable costs per unit are $210. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many.
a.What will be the percentage decline in sales if the economy enters a recession? Answer is: 50%
b.What will be the percentage decline in profits if the economy enters a recession? Answer is: 71%
c.Comparing your answers to (a) and (b), how would you measure the operating leverage of this firm? Answer is: ?????
Can you please help me with the question "C" Please note that 2,5; 1.4; 1.42; 1.43 are non correct.
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