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You are considering starting a new factory producing smail electric heaters. Each unit will sell at a price of $17. The production cost of each
You are considering starting a new factory producing smail electric heaters. Each unit will sell at a price of $17. The production cost of each heater is $12. The foxed cost of production is $18000. You are expecting to sell 14000 units per year. This project has an economic life of 8 years. The project requires an investment of $185000 in plants and equipment. This equipment will be depreciated using a straight line depreciation method to a salvage value of zero. The reguired rate of rotum for the project is 11 percent. The marginal corporate tax rate is 21 percent. Based on these assumptions, calculate the degree of oporating leverage (DOL)? 2.12 2.42 2.32 2.22
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