1. What do you think is the relationship between a firm's operating leverage and its financial leverage? Do you think the two measures are positively correlated, negatively correlated, or unrelated? Explain your answer.?
2. Xray Inc. is planning on paying an annual dividend of $2.20 per share next year and currently trades for $26. If investors require a 10% rate of return, what is the expected growth rate in dividends?
3. You want to go to Europe 5 years from now, and you can save $3,600 per year, beginning one year from today. You plan to deposit the funds in a mutual fund that you think will return 8.5% per year. Under these conditions, how much would you have just after you make the 5th deposit, 5 years from now??