Breakpoint
Short definition
A breakpoint is the investment scale at which a financing rung (retained earnings, a cheap line) is used up and the marginal cost of capital jumps. The IOS–MCC intersection sets the last accepted project.
Detailed explanation
The textbook story: internal equity, then debt, then new shares — WACC jumps at each rung. In a constrained market a rung closes and the break comes earlier.
In practice covenants and collateral produce a break before the coupon does. The point is not a universal amount; it is a function of your lines and payout.
Why it matters for the CFO
The capex cap should stop at the break before WACC is quietly raised. Otherwise you step onto an expensive rung while saying “we are still below WACC”.
How it is calculated
Kırılma ≈ iç kaynak (ve ucuz basamak) bitince marjinal sermaye maliyetinin sıçradığı yatırım tutarı
Variables in the formula
- MCC: marginal cost of capital schedule
How to read it
The breakpoint is the quantitative face of pecking-order. If no line opens, the break is zero new investment.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.