1. Using the free cash flow valuation model, show the only avenues by which capital structure can affect value.

1. 1.) What is business risk? What factors influence a firm's business risk?
2. What is operating leverage, and how does it affect a firm's business risk? Show the operating break-even point if a company has fixed costs of $200, a sales price of $15, and variable costs of $10.
3. Explain the difference between financial risk and business risk.