How does operating leverage simultaneously

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How does operating leverage simultaneously (1) make a company more risky to investors, and (2) potentially increase the rate of return to common stockholders? Based on this, what would be a good rule of thumb to follow if you were considering a new project that would require an investment of $10,000,000, your current return of equity was 10%, and you could borrow money for the project at 7%? (In terms of expected rates of return on the project)

Reference no: EM131595820

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