Finance Formulas / July 13, 2018 / Alia Marquez
To examine the relationship between interest rates and bond prices, imagine an investor buys a bond from ABC Corporation with a 4% coupon rate and a $1,000 face value. Another investor waits a few weeks before buying a bond, and during that time, the issuer raises interest rates to 6%. At this point, the second investor can buy a $1,000 bond from ABC Corporation and receive $60 in interest per year.
The purpose of the break-even analysis formula is to calculate the amount of sales that equates revenues to expenses and the amount of excess revenues, also known as profits, after the fixed and variable costs are met. There are many different ways to use this concept. Let’s take a look at a few of them as well as an example of how to calculate break-even point.
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