TRUE OR FALSE

9. The optimal capital structure is the mix of debt, preferred stock and common equity that minimizes the weighted average cost of the firms employed capital.

10.Generally the higher a firms business risk , the higher the amount of financial leverage that will be used in the optimal structure.

11. With operating leverage, a change in EBIT will cause a change in sales

12. Financial leverage benefits shareholders when the return on assets is greater than the cost of debt.