If a Firm's Fixed Costs Are Exactly Equal to Its

Multiple Choice

If a firm's fixed costs are exactly equal to its depreciation expense, and both are greater than zero, then at its financial break-even point the DOL ____________. (Assume that the project has conventional cash flows, no salvage value, and no net working capital investments.)

A) Is less than two.
B) Is equal to two.
C) Is greater than two.
D) Is undefined since you can't divide by zero.
E) Cannot be determined without more information.