Based on m& m proposition 2 with taxes, the weighted average cost of capital:

a. is equal to the aftertax cost of debt.
b. has a linear relationship with the cost of equity capital.
c. is unaffected by the tax rate.
d. decreases as the debt-equity ratio increases.

Exercise 2-12 cost behavior; high-low method [lo2-3, lo2-4] speedy parcel service operates a fleet of delivery trucks in a large metropolitan area. a careful study by the company’s cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. if a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile. required: 1.& 2. using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (round the "variable cost per mile" to 3 decimal places.)