Outflung computers has $1000 in revenue this year, along with COGS of $400 and SG&A of $100. the required rate of return on its equity is 14%, and the risk free rate is 5%. Assume that the COGS only includes the marginal costs of selling a computer. banana is considering adding $700 worth of debt with a coupon rate of 5% and a YTM of 7.9% to its capital structure. Suppose revenues fall by $300. What is the per cent change in profit with and without the debt? issue that the total variable productions costs remain the same.

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