The Break-Even Point Can Be Calculated as

question 96

Multiple Choice

The break-even point can be calculated as

• A) variable costs divided by contribution margin per unit.
• B) total costs divided by contribution margin per unit.
• C) variable costs times contribution margin per unit.
• D) fixed costs divided by contribution margin per unit.

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Definitions:

Dividend Growth Model

A model that estimates the value of a stock based on its expected dividends and their growth rate.

Retained Earnings

The portion of net earnings not paid out as dividends but reinvested in the business or kept as reserve.

Cost of Equity

The return a company theoretically pays to its equity investors, i.e., shareholders, to compensate them for the risk of investing in the stock.

Marginal Cost of Capital

The cost of obtaining an additional dollar of new capital, which increases as more capital is raised due to increasing risk and/or decreasing attractiveness to investors.