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Kruka [31]
3 years ago
13

The degree of pretax cash flow operating leverage at Rackit Corporation is 2.7 when it sells 100,000 units of its new tennis rac

ket and its EBITDA is $95,000. Ignoring the effects of taxes, what are the fixed costs for Rackit Corporation?
Business
1 answer:
coldgirl [10]3 years ago
4 0

Answer:

the fixed costs for Rackit Corporation is $161,500.

Explanation:

Cash Flow DOL = 1 + Fixed Cost / EBITDA

2.7 = 1 + Fixed Cost / 95,000

1.7 = Fixed Cost / 95,000

Fixed Cost = $161,500

Therefore, the fixed costs for Rackit Corporation is $161,500.

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