Scenario and sensitivity Analysis i Saved If we consider the effect of taxes, then the degree of operating leverage can be written as: DOL = 1 + [FC x (1 T2 - Tcx D] /OCF points Skipped eBook Consider a project to supply Detroit with 25,000 tons of machine screws annually for automobile production. You will need an initial $2,600,000 investment in threading equipment to get the project started; the project will last for five years. The accounting department estimates that annual fixed costs will be $650,000 and that variable costs should be $200 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the five-year project life. It also estimates a salvage value of $600,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $290 per ton. The engineering department estimates you will need an initial net working capital investment of $260,000. You require a return of 12 percent and face a marginal tax rate of 38. Print References a. What is the percentage change in OCF if the units sold changes to 26,000? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places, e.g., 32.1616.) Percentage change in OCF % b. What is the DOL at the base-case level of output? (Do not round intermediate calculations and round your final answer to 4 decimal places, e.g., 32.1616.) DOL