Question: How does operating leverage simultaneously
(1) make a company more risky to investors, and
(2) potentially increase the rate of return to common stockholders? Based on this, what would be a good rule of thumb to follow if you were considering a new project that would require an investment of $10,000,000, your current return of equity was 10%, and you could borrow money for the project at 7%? (In terms of expected rates of return on the project)