Metcalf, Inc. is planning to buy a new machine to begin making one of its component parts internally rather than contracting it out to a supplier. Since this is a major investment, they plan to fund it by issuing additional common stock. Assuming that this change has no initial impact on EBIT, the change should:

	a.	increase operating leverage and decrease financial leverage.
	b.	decrease both operating and financial leverage.
	c.	decrease operating leverage and increase financial leverage.
	d.	The impact on financial and operating leverage cannot be determined.
	e.	increase both operating and financial leverage.

Business costs are either _____ or can be separated into those components.

	a.	fixed or material
	b.	variable or utility
	c.	people related or equipment related
	d.	fixed or variable

The Lever Crowbar Company has a target capital structure of 70 percent debt and 30 percent equity with no preferred stock. The firm doesnt plan to raise equity capital beyond next years retained which have a cost of 15%. Debt costs the company 8 percent before taxes of 40%. What is Levers weighted average cost of capital.

	a.	7.60%
	b.	14.0%
	c.	7.86%
	d.	4.50%