For a firm with a DOL of 3.5,an increase in sales of 6% will:
A) increase pretax profits by 3.5%.
B) decrease pretax profits by 3.5%.
C) increase pretax profits by 21.0%.
D) increase pretax profits by 1.71%.

Name: For a firm with a DOL of 3.5,an increase in sales of 6% will: A) increase pretax profits by 3.5%. B) decrease pretax profits by 3.5%. C) increase pretax profits by 21.0%. D) increase pretax profits by 1.71%.
Brand: Quizplus
Rating: 4.9 (38 reviews)

Question

Quizplus · Accepted Answer

ΔProfits = 6% × 3.5 = 21%

For a Firm with a DOL of 3