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Computing the firm weighted average cost of capital

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1. A particular firm has an operating leverage of 1.2. If the firm's sales decrease by 8%,its percentage change in EBIT would be?

2. A firm's debt and equity is composed of $10 million debt,$1 million of preferred stock, and $9 million of common stock. Assuming the marginal tax rate is 30%, the cost of debt is 12%, cost of preferred stock is 17%, and a cost of common stock of 20%,what is the firm's weighted average cost of capital?

Reference no: EM131068105

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