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1. what is the business risk. what factors influence a firms business risk? 2. what is operating leverage, and how does it affect a firm's

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1. what is the business risk. what factors influence a firms business risk?

2. what is operating leverage, and how does it affect a firm's business risk/ show the operating break even point if a company has fixed cost of 200 , a sales price of 15 and variables cost of 10

3.

Mini Cass Assume you have just been hired as a business manager of PiczaPalace, a regional pizza restaurant chain. The company's EBIT was $50 million last year and is not expected to grow (g-0). The firm is currently financed with all equity and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that most firms' owners would be financially hetter off if the firms used some debt. When you suggested this to your new hoss, he encouraged you to pursue the idea. As a first step, assume that you obtained from the firm's investment banker the following estimated costs of debt for the firm at different capital structures: m is currently financed with all 0% 20 30 40 50 8.0% 8.5 10.0 12.0 If the company were to recapitalize, debt would be issued, and the funds received would be used to repurchase stock. PizzaPalace is in the 40 percent state-plus-federal corporate tax bracket, its beta is 1.0, the risk-free rate is 6 Ex Provide a brief overview of capital structure effects. Be sure to identify the ways in which capital structure can affect the weighted average cost of capital and free cash flows. Bteroin h aete

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