Which of the Following Is True of a Break Point

question 23

Multiple Choice

Which of the following is true of a break point on a firm's marginal cost of capital (MCC) schedule?

• A)A break point (BP) is defined as the last dollar of new total capital that can be raised before an increase in the firm's weighted average cost of capital (WACC) occurs.
• B)A break point (BP) is defined as the weighted average cost of capital (WACC) of the last dollar of new capital that a firm raises.
• C)A break point denotes the cost of obtaining an additional dollar of new capital that is required to meet the firm's capital budgeting needs.
• D)At the break point, the marginal cost of raising new capital equals the marginal revenues generated from investing the new capital.
• E)A break point shows the point at which the yield to maturity (YTM) on debt is equal to the firm's required rate of return.

Understand and apply basic arithmetic operations and properties to solve real-world problems.

Calculate and analyze the impact of sales taxes on retail transactions.

Compute and interpret the average cumulative investment over a time period.

Determine pricing strategies and cost percentages in a business context.

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