2. What is operating leverage? How, if at all, is it similar to financial leverage? If a firm has high operating leverage would you expect it to have high or low financial leverage? Explain your reasoning.

 

4. Explain how a company can incur costs of financial distress without ever going bankrupt. What is the nature of these costs?

 

10. What is the present value of a cash flow stream of $1,000 per year annually for 15 years that then grows at 4 percent per year forever when the discount rate is 13 percent?

Answer rating: 100% (QA)

1 Operating Leverage Operating leverage refers to the degree to which a companys fixed costs are incorporated into its cost structure It measures the ... View the full answer