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The Sound Corp. is considering whether to launch its new headphone. The selling price will be $300 per headphone. The variable costs will be $200
"The Sound Corp. is considering whether to launch its new headphone. The selling price will be $300 per headphone. The variable costs will be $200 per headphone, and fixed costs will be 300,000 per year. The total investment needed to undertake the project is $2 million. This amount will be depreciated straight-line to zero over the 5-year life of the equipment. The salvage value is zero. There are no working capital consequences. The Sound Corp. has a 20 percent required return on new projects. Based on market surveys, total sales is projected to be 9,000 headphones per year. What is the degree of operating leverage (DOL) at the projected sales level? (Ignoring taxes)" 1.21 1.33 1.46 O 1.50 1.58
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