Problemmikes business is analyzing a new type of insulation, Ask an Expert

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Problem:

Mikes Business is analyzing a new type of insulation for interior walls. Management has complied the following information to determine whether or not this new insulation should be manufactured. The insulation project has an initial fixed asset requirement of 1.3 million, which would be depreciated straight-line to zero over the 12 year life of the project. Projected fixed costs are 742000 and the anticipated annual operating cash flow is 241000.

Required:

Question: What is the degree of operating leverage for this project?

Note: Please show how to work it out.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162375

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