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What is the average inventory level, based on EOQ, for a firm that has annual sales of 2,500 units, costs per order of $45, and carrying costs of $5 per unit?
Cost of Equity
The return that investors expect for investing in a company's equity, reflecting the risk of owning equity in the company.
Interest Tax Shield
The tax saving attained by a firm from interest expense.
M&M Proposition II
A theory by Modigliani and Miller that suggests the cost of equity is a linear function of the company's debt/equity ratio, under a no-tax environment.
Financial Risk
The possibility of losing money on an investment or business venture due to various financial factors.
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