24. The four basic sources of long-term funds for the business firm are

A. current liabilities, long-term debt, common stock, and preferred stock.

B. current liabilities, long-term debt, common stock, and retained earnings.

C. long-term debt, paid-in capital in excess of par, common stock, and commercial paper.

D. long-term debt, common stock, preferred stock, and retained earnings.

______ 25. Generally, the order of cost from least expensive to the most expensive, for long-term

capital of a corporation is

A. long-term debt, preferred stock, retained earnings, new common stock.

B. common stock, preferred stock, long-term debt, short-term debt.

C. new common stock, retained earnings, preferred stock, long-term debt.

D. preferred stock, long-term debt, retained earnings, common stock.

______ 26. A firm has determined its cost of each source of capital and its optimal capital structure, which is

composed of the following sources and target market value proportions:

Source of Capital	Target Market Proportions:	After-Tax Cost
Long-Term Debt	45%	5%
Preferred Stock	10%	14%
Common Stock Equity	45%	22%

If the firm were to shift toward a more leveraged capital structure (i.e., a greater percentage of

debt in the capital structure), the weighted average cost of capital would

A. increase.

B. remain unchanged.

C. decrease.

D. not be able to be determined.

______ 27. The firms __________________ is the level of sales necessary to cover all operating costs.

I.e., this is the point at which Earnings Before Interest and Taxes (EBIT) is equal to $0.

A. cash breakeven point

B. financial breakeven point

C. operating breakeven point

D. total breakeven point.

______ 28. If a firms selling price per unit decreases, the firms operating breakeven point will

A. decrease.

B. increase.

C. remain unchanged.

D. change in an undetermined direction.

______ 29. Fixed costs are a function of ______________, not sales, and are typically contractual.

A. EBIT

B. variable cost.

C. time

D. marginal cost

______ 30. If a firms fixed operating costs increase, the firms operating breakeven point will

A. increase.

B. not be affected.

C. decrease.

D. remain unchanged.