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b. Determine the optimal capital structure on the basis of (1) maximization of
expected earnings per share and (2) maximization of share value.
c. Which capital structure do you recommend? Why? PROBLEMS
LG1 12–1 Breakeven point—Algebraic Kate Rowland wishes to estimate the number of
flower arrangements she must sell at $24.95 to break even. She has estimated
fixed operating costs of $12,350 per year and variable operating costs of $15.45
per arrangement. How many flower arrangements must Kate sell to break even
on operating costs? 546 PART 4 LG1 Long-Term Financial Decisions 12–2 Breakeven comparisons—Algebraic Given the price and cost data shown in the
accompanying table for each of the three firms, F, G, and H, answer the following questions.
Sale price per unit
Variable operating cost per unit
Fixed operating cost F G H $ 18.00 $ 21.00 $ 30.00 6.75 13.50 12.00 45,000 30,000 90,000 a. What is the operating breakeven point in units for each firm?
b. How would you rank these firm...
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