Low operating leverage


Which of the given statements is accurate?

a. In common, a firm with low operating leverage as well has a small proportion of its total costs in the form of fixed costs.

b. There is no reason to think which changes in the personal tax rate would influence firm's capital structure decisions.

c. A firm with high business risk is more probable to raise its use of financial leverage than a firm with low business risk, supposing all else equivalent.

d. If a firm's after-tax cost of equity surpasses its after-tax cost of debt, it can always decrease its WACC by raising its use of debt.

e. Assume that a firm has less than its optimal amount of debt. Increasing its use of debt to the point where it is at its optimal capital structure will reduce the costs of both debt and equity financing.

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