A Project Has the Following Estimated Data: Price = $800

Multiple Choice

A project has the following estimated data: price = $800 per unit; variable costs = $650 per unit; fixed costs = $900,000; required return = 8%; initial investment = $5,500,000; $500,000 salvage
Value; life = 14 years. What is the degree of operating leverage at the financial break-even level of
Output?

A) 2.09
B) 2.19
C) 2.29
D) 2.39
E) 2.49