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.

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Definitions:

Potassium

A soft, silvery-white metallic element, symbol K, with atomic number 19, essential for many biological functions and used in various industrial applications.

Elemental Symbol

A letter or combination of letters representing a chemical element in the periodic table.

Ruthenium

A rare transition metal belonging to the platinum group of the periodic table, with the symbol Ru and atomic number 44.

Elemental Symbol

A one- or two-letter notation derived from the name of an element, used to represent it in chemical formulas and equations.