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