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Question
Alpha Inc. combines the marginal cost of capital (MCC) schedule with the investment opportunity schedule (IOS) on a single graph. Which of the following areas on the MCC/IOS graph shows the maximum excess of marginal returns over marginal costs?
a. The area that is below the marginal weighted average cost of capital (MCC) schedule
b. The area that is above the IOS schedule
c. The point of intersection of the MCC schedule and the IOS schedule
d. The point of intersection of weighted average cost of capital (WACC) schedule and y-axis
e. The area that is above the MCC schedule but below the IOS schedule when the IOS line is above the MCC line
Answer
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Related questions
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