=+b. (1) Determine the break point associated with common equity. A break point represents the total amount of financing that the firm can raise before it triggers an increase in the cost of a particular financing source. For example, O’Grady plans to use 25% long-term debt in its capital structure. So, for every $1 in debt that the firm uses, it will use $3 from other financing sources (total financing is then $4, and because $1 comes from long-term