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What is the degree of operating leverage of project

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Reference no: EM132383995

A project has a fixed costs of $1,300 per year, depreciation charges of $500 per year, annual revenue of $6,900, variable costs equal to two-thirds of revenues and the tax rate is 20%.

a) If sales increase by 10%, what will be an increase in pretax profits?

b) What is the degree of operating leverage of this project?

Reference no: EM132383995

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