1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
MrRa [10]
3 years ago
5

ATech has fixed costs of $7 million and profits of $4 million. Its competitor, ZTech, is roughly the same size and this year ear

ned the same profits, $4 million. But it operates with higher fixed costs of $8 million and lower variable costs. a. What is the degree of operating leverage (DOL) for each company? (Defined here as 1 + Fixed costs/Profit.) (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Business
1 answer:
Triss [41]3 years ago
5 0

Answer: Degree of Operating Leverage

A Tech = 2.75

Z Tech = 3

Explanation:

As defined in question itself,

Degree of Operating Leverage = 1 + \frac{fixed\ cost}{Profit}

As here, it is provided that profit for both the companies are same amounting $4 million.

Although the fixed cost differ by $1 million.

A Tech Degree of operating Leverage = 1 + \frac{7,000,000}{4,000,000} = 2.75

Z Tech Degree of Operating Leverage = 1 + \frac{8,000,000}{4,000,000} = 3

This clearly demonstrates that A Tech will reach its break even faster than the Z Tech as the ratio of fixed cost to variable cost is lower in A tech in comparison to Z Tech.

You might be interested in
That afternoon, you meet with the owners privately to discuss the data you received. Which of the factors analyzed do you think
Kazeer [188]

Answer:

From the information from the remaining part of the question. The factor that would affect the success or failure of Caffè Gustoso is the Cultural factor.

Explanation:

Caffè Gustoso an Italian word meaning "Tasty coffee". This tells us that the firm is in the food and beverage industry.

Each of the countries mentioned are found in different continents having diverse cultures.

Key to their success is to know the culture of these countries as regards to coffee.

4 0
3 years ago
What are the five primary factors of production?
Lina20 [59]
Land, labor, capital, and entrepreneurship
7 0
3 years ago
Your neighbor offers you an investment opportunity, which will pay a single lump sum of S2,000 five years from today. The invest
Mazyrski [523]

Answer:

This question has a missing information. I have found the complete version and pasted it down below;

"Your neighbor offers you an investment opportunity, which will pay a single lump sum of S2,000 five years from today. The investment requires a single payment of <em>$1,500 today</em>. The return on the investment is % A. 4.195 B. 4.729 C. 5.361 D. 5.922 E. 6.961 "

Explanation:

This question requires you to find that discount rate given a single future cashflow. $2,000 is expected 5 years from today, hence the future value. $1,500 payment today is the dollar value today, hence the Present value.

Using a financial calculator, you will key in the following inputs;

Total duration; N = 5

Present value; PV = -1,500 (it's a cash outflow hence negative)

Recurring payment; PMT = 0

Future value; FV = 2,000

then find the rate by keying in CPT I/Y = 5.922%

Therefore, the return on the investment is 5.92%

7 0
4 years ago
If the consumer price index changes from 125 in september to 150 in october, what is the rate of inflation?.
nexus9112 [7]
The rate of inflation is 20%.
In September price is = 125 
And in October  price = 150
rate of inflation = (150 -125)/125 x 100 
= 25/125 x 100
=0.2 x 100 = 20% 
4 0
3 years ago
You are considering purchasing stock in Canyon Echo. You feel the company will increase its dividend at 4.1 percent indefinitely
grigory [225]

Answer:

Price of stock = $53.73

Explanation:

<em>The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.  </em>

The model is given as  

P = D×(1+g)/(r-g)  

P- price, D- dividend payable now , r -cost of equity, g - growth rate in dividend

DATA:

P= ?

D- 3.20

g- 4.1%

r-10.3%

Price of stock = 3.20× 1.041/(0.103-0.041) = 53.73

Price of stock = $53.73

7 0
3 years ago
Other questions:
  • Which of these statements is true? Group of answer choices
    15·1 answer
  • Maxwell and Smart are forming a partnership. Maxwell is investing a building that has a market value of $180,000. However, the b
    12·1 answer
  • EA13.
    12·1 answer
  • The easiest way to convert your paper files into electronic files is by _______.
    13·2 answers
  • Ralph Watkins owns a large home on a two-acre lot in Tempe, Arizona. Watkins has much of the lot covered with tiff grass and is
    10·1 answer
  • Consider the following production and cost data for two products, L and C: Product L Product C Contribution margin per unit $ 12
    10·1 answer
  • Advantages of profit maximization​
    6·2 answers
  • ANSWER FAST please !!!
    7·1 answer
  • Question 1-12
    15·1 answer
  • In the early days of selling, companies studied and wrote down the sales pitches of their most successful people, and created ca
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!