Week 7

1. Discuss the relationships between operating, financial and combined leverage?  Does the firm use financial leverage if preferred stock is present in its capital structure?   What type of effect occurs when the firm uses operating leverage?

2.  In the introduction to the chapter, we learned that Apple Computer (AAPL) recently reinstated the payment of cash dividends, which had been suspended since the 1990s. What are some reasons that might have influenced the firm’s decision to begin paying dividends again?

Instructions: Your initial response should be at least 250-words with at least one scholarly journal reference. Support your main response with at least 1 scholarly journal reference in addition to the course materials. Please note Wikipedia, Investopedia and similar websites are not credible academic references. Use the Online Library to research credible references.