In determining the optimal level of output, a firm should aim for the a. point where decreasing returns become negative returns. b. output level where fixed costs exceed variable costsc. point of maximum profitability for the companyd. output level where marginal returns are still increasing

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.