Orlando runs a consultancy firm. what is a key feature of orlando’s chosen type of business?
a.
the income depends on the net sales.
b.
the key expense is the cost of goods purchased for resale.
c.
the business maintains accounts such as purchases and sales.
d.
the business incurs certain operating expenses.

The common stock and debt of northern sludge are valued at $65 million and $35 million, respectively. investors currently require a return of 15.9% on the common stock and a return of 7.8% on the debt. if northern sludge issues an additional $14 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? assume that the change in capital structure does not affect the interest rate on northern’s debt and that there are no taxes.