1. How do increases in debt affect the weighted average cost of capital?
2. Assume that a company's annual sales are 40 units at $20 each. Its variable costs are $10 per unit, fixed costs are $100 per year, and depreciation is $100 per year. What is the accounting breakeven point in units?
3. Kim currently holds a 10-year, 8% coupon U.S. Treasury bond that she bought last week. If U.S. Treasury bond interest rates go up to 9%, what will happen to the price of Kim's bond?