1. Given the following table (assume no preferred stock is outstanding or to be issued), what should be the WACC at 30%, 40%, 50% debt:?

Table 14.3. Cost of Capital Projections for Exercise 2

% debt	cost of debt	after-tax cost of debt (T=21%)	% equity	cost of equity	WACC
0%	5.0%			9.0%
10%	5.0%			9.1%
20%	5.5%			9.3%
30%	6.2%			9.6%
40%	7.0%			10.2%
50%	7.8%			11.6%
60%	8.6%			13.0%
70%	9.5%			14.8%
80%	10.5%			16.0%
90%	12.0%			19.0%
100%	15.0%			24.0%

An analyst projects that company ABCs sales will increase from $1.2 million to $1.4 million. COGS will increase from $600 thousand to $680 thousand, but fixed costs and depreciation expense should remain steady at $200 thousand and $100 thousand, respectively. Interest paid will increase from $100 thousand to $120 thousand. The firms tax rate will hold steady at 25%. All else being equal, what is the firms degree of operating leverage?

Bulldog Inc. has fixed operating costs of $400,000, variable operating costs of $20 per unit, and a selling price of $70 per unit. Interest expense is $100,000 per year. Bulldog has a 21% tax rate. Calculate the firms degree of operating leverage when it increases sales from 12,000 units to 13,000