Break points can be determined by dividing the amount of funds available from each financing source at a fixed cost by the proportion for that financing source.

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Break points are typically calculated based on the target capital structure, which is the desired balance between debt and equity financing for a company. By dividing the amount of funds available from each financing source at a fixed cost by the proportion for that financing source, companies can identify the break points where the cost of capital changes due to changes in the financing mix. This helps companies optimize their capital structure and minimize the cost of financing.

Break Points Can Be Determined by Dividing the Amount of Funds