a) ABC Corp needs to raise $50 million. It has a Target Capital Structure of 50% debt and 50% common equity. It can borrow all the money it wants at an after tax cost of debt of 7%. It has $10 million in Retained Earnings, and has the authorization to sell up to $50 million in new common stock.

Given that information, at what dollar amount will the incur at Break Point in their MCC schedule?

($10m, $20m, $40m, $120m)

b) ________ is the weighted average cost of funds over the long run.

(risk premium, nominal cost, cost of capital, risk-free rate)