In utilizing the investment opportunity schedule and the weighted marginal cost of capital, a capital project will be
A) acceptable as long as the marginal return equals or exceeds the weighted marginal cost of capital.
B) unacceptable if the marginal return equals the weighted marginal cost of capital.
C) unacceptable if the marginal return equals or exceeds the weighted marginal cost of capital.
D) acceptable as long as the marginal return equals or exceeds the average cost of capital over all levels of needed funding.

Question

Quizplus · Accepted Answer

The utilization of the investment opportunity schedule and weighted marginal cost of capital is to compare the expected return from the investment project with the cost of capital. If the marginal return equals or exceeds the weighted marginal cost of capital, it means that the project will generate enough return to cover the cost of financing, and the project will be acceptable. Therefore, option A is the correct answer. Option B and C are incorrect as they both suggest that the project is unacceptable, which is not necessarily true. Option D is also incorrect as it refers to the average cost of capital, which is not relevant in this case.

In Utilizing the Investment Opportunity Schedule and the Weighted Marginal