A Project Has the Following Estimated Data: Price = $200

Multiple Choice

A project has the following estimated data: price = $200 per unit; variable costs = $150 per unit; fixed costs = $400,000; required return = 9%; initial investment = $1,500,000; $200,000 salvage
Value; life = 15 years. What is the degree of operating leverage at the financial break-even level of
Output?

A) 1.23
B) 2.23
C) 3.23
D) 4.23
E) 5.23