Marginal cost and marginal revenue, Finance Basics

Use the concepts of marginal cost and marginal revenue to derive an optimal capital budget for Company X, which has identified 7 possible investment projects and determined its cost of capital as shown below.

Table A: Alternative Projects, Required Investments, and Expected Rate of Return

Project

Investment Required in Millions of Dollars

Expected Rate of Return on Investment

A

150

12%

B

300

15%

C

125

10%

D

75

16%

E

50

20%

F

500

14%

G

250

18%

 Table B: Cost of Capital by Amount Raised

Block of Funds
 (in Millions)

Amount of Funds
in Block

Cost of Capital for Block

First Block of Funds

$500

10%

Second Block of Funds

$400

11%

Third Block of Funds

$300

12%

Fourth Block of Funds

$200

13%

Fifth Block of Funds

$100

14%

Sixth Block of Funds

$100

15%

Posted Date: 4/1/2013 5:21:47 AM | Location : United States







Related Discussions:- Marginal cost and marginal revenue, Assignment Help, Ask Question on Marginal cost and marginal revenue, Get Answer, Expert's Help, Marginal cost and marginal revenue Discussions

Write discussion on Marginal cost and marginal revenue
Your posts are moderated
Related Questions
Cost of Finance - Capital Structure This is the price the company pays to retail and acquire finance. To get finance a company will pay implicit costs that are commonly recogn

Commercial Banks - Banking Institutions These are financial institutions such accept deposits of money from the universal public, safeguard the deposits and create them availa


Review the budget below and answer the questions following the budget. FINANCIAL ACCOUNTING—STATEMENT OF REVENUE AND EXPENSES Statement of Revenue and Expenses for Group Practice f

DIY Inc. plans to raise $200,000 with a right offering. The current stock price is $100 and there are 80,000 shares outstanding.  a. If DIY sets the subscription price to be $80

Based on the example in Lesson 2, compute your quarterly interest for three years if you deposit $500 at 8 percent, compounded quarterly. Remember to divide the 8 percent by 4 to g

EOQ Assumptions The basic EOQ model creates the following supposition as: i) The demand is identified and constant over the year ii) The ordering cost is con


Valuation of Share A number of parties are interested however in the value of shares and securities and that will include: Company shareholders, vendors and directors of

Head Office and Branch or Subsidiary MNC has diverse operations set up in dissimilar geographical locations. The HQ acts like the principal and the subsidiary like an agent he