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Im taking BEC on May 22 so I need help understanding some topics, mainly in B3.
Can someone please explain to me the formulas for the Degree of Operating and Financial Leverage. The book is saying the formula is one thing and the questions are using a completely different method. For example explaining the terms EBIT & EPS. It just isn’t clicking for me.
Also I think Im starting to grasp the cost of debt concepts but just to confirm,
– is the cost of debt (pre-tax), risk-free rate of return, & the required rate of return all the same thing?
– is the cost of equity and the cost of retained earnings both found by using the formula kre = krf + b(km – krf) ?
– how is the “weighted average cost of debt” different from just “cost of debt”?
I appreciate the help. Thanks!
AUD – Passed
Reg – Passed
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