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    Operating & Financial leverage: break even analysis, varied industries, risk, interest rate

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    I need your help on how to discuss the various uses for break-even analysis.

    What factors would cause a difference in the use of financial leverage for a utility company and an automobile company?

    How do I explain how the break-even point and operating leverage are affected by the choice of manufacturing facilities (labor intensive versus capital intensive).

    What does risk taking have to do with the use of operating and financial leverage?

    How does the interest rate on new debt influence the use of financial leverage?

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    Solution Preview

    I need your help on how to discuss the various uses for break-even analysis. The break-even analysis is used to estimate unknown factor to make project decisions. Project managers need to know whether to go ahead with a project or not. They need to evaluate the demand, price, cost and supply needed to make the project successful. Companies use the break-even analysis to decide on the specification for designing new products, because ...

    Solution Summary

    In the solution, each of the five questions is answered separately in a sentence or two of easily understood answers.