Marginal cost and marginal revenue, Finance Basics

Assignment Help:

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%


Related Discussions:- Marginal cost and marginal revenue

Becoming a tutor, How to become a tutor in this platform?

How to become a tutor in this platform?

Explain about the monetary role of banks, Explain about the monetary role o...

Explain about the monetary role of banks. The Monetary Role of Banks: • A bank is a financial intermediary. • Bank reserves are the currency banks hold within their va

IS-LM, After read all the available information carefully, prepare a two pa...

After read all the available information carefully, prepare a two page (double-spaced) essay and answer the following questions: Assume that we have the following data: C=100+0.50Y

Financial Institution Regulations, Why are financial institutions heavily r...

Why are financial institutions heavily regulated, with specific focus on their ability to increase or reduce the money supply?

The importance of tax, Discuss business taxes and their importance in finan...

Discuss business taxes and their importance in financial decisions

Shareholders - measuring business performance, Shareholders - Measuring Bus...

Shareholders - Measuring Business Performance Shareholders Actual owners are interested in the company's both short and long term survival.  For this cause they will need

Compound interest and compound amount.., a debt off Rs1000 with interest at...

a debt off Rs1000 with interest at 10% compounded quarterly will be repaid by payments Rs. 200 at the end of 3 months and three equal payments at the end of 6 9 and 12 months. find

Example of conversion ratio and conversion price, Example of Conversion Rat...

Example of Conversion Ratio and Conversion Price ABC Company Ltd books as:   10.000, Sh.20 ordinary share capital 10,000, Shs.10 8% preference share c

Running own small businesss, how to do basic accountancy and what can i cla...

how to do basic accountancy and what can i claim back

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd