You Are the Manager of a Project That Has a 2.8

Multiple Choice

You are the manager of a project that has a 2.8 degree of operating leverage and a required return of 14 percent.Due to the current state of the economy,you expect sales to decrease by 7 percent next year.What change should you expect in the operating cash flows next year given your sales prediction?

A) 19.60 percent decrease
B) 16.03 percent decrease
C) 13.46 percent decrease
D) 5.60 percent decrease
E) 2.74 percent decrease