QUESTION 10 Lenders base their required return on

		the firm's average systematic risk: the firm's beta
		the difference between the LIBOR and the prime rate
		the borrower's loan servicing capability and secondary repayment sources
		the weighted MCC for the project under consideration for investment

QUESTION 11

1. A breakpoint is best described as

   		the point in the range of capital cost where the firm is indifferent between two mutually exclusive projects
   		the point where the present value of cash inflows (PVI) is exactly equal to the present value of cash outflows (PVO)
   		a rank-ordering that is suboptimal
   		the dollar amount of total funding where capital costs increase