Limitation of break-even analysis

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Reference no: EM132045245

1. Which of the following is a limitation of break-even analysis?

options:

It does not give weightage to the cost of labor that is incurred during production.

Sometimes it is hard to know whether a cost is fixed or variable.

It does not give an estimate of how much profit can be earned once the break-even point is obtained.

Sometimes it cannot predict the effect of changes in sales price.

2. The equity position of the company is: Common Stock: 300,000 shares, selling for $75 per share; the beta is 1.3, the market risk premium is 8 percent and the risk free rate is 5 percent. The cost of equity for the company is:

.0500

.1540

.0800

.1040

.1150

Reference no: EM132045245

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