Q - NPV project, increase

ShooterMcCFA

Please explain the breakpoint of a project. Schweser note says:

"Any given project’s NPV will decline when a breakpoint is reached." &

"An increase in the after-tax cost of debt may occur at a break point."

Please explain.

ftwcfa

to add insult to injury:

breakpoint is calculated as (amount of capital where component cost changes / weight of component in the WACC)