The wealth-maximizing investment decision for a firm occurs when
A) the weighted marginal cost of capital equals the investment opportunity schedule.
B) the cost of capital equals the return on the project.
C) the weighted marginal cost of capital is less than the investment opportunity schedule.
D) the weighted cost of capital exceeds the marginal cost of capital.

Question

Quizplus · Accepted Answer

The wealth-maximizing investment decision for a firm occurs when the weighted marginal cost of capital equals the investment opportunity schedule. This means that the cost of capital and the return on the project are balanced, and the firm is making the most efficient use of its resources. Options B, C, and D do not reflect the optimal investment decision.

The Wealth-Maximizing Investment Decision for a Firm Occurs When