15.1

15-11 of the breakup, the capital struc- Surviving companies were specified and much attention was given to the increased competition telephone companies could expect in the future. Do you think the optimal capital structure after the breakup was the same as the pre-breakup optimal capital structure? Explain your position A firm is about to double its assets to serve its rapidly growing market. It must choose between a highly automated production process and a less automated one. It also must choose a capital structure for financing the expansion. Should the asset investment and financing decisions be jointly determined, or should each decision be made separately? How would these decisions affect one another? How could the leverage concept be used to help management analyze the situation? PROBLEMS 15-1 Easy Problems 1-5 BREAK-EVEN ANALYSIS A company's fixed operating costs are $600,000, its variable costs are $2.00 per unit, and the product's sales price is $3.00. What is the company's break-even point; that is, at what unit sales volume will its income equal its costs