The investment opportunity schedule (IOS)and the MCC viewed together identify which capital projects should or should not be undertaken.

Question

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The investment opportunity schedule (IOS) helps to identify which capital projects should be undertaken based on their expected rate of return, while the marginal cost of capital (MCC) helps to determine the minimum required rate of return for a project to be acceptable. By comparing the expected rate of return of a project with the minimum required rate of return (the MCC), managers can decide which projects should or should not be undertaken. Therefore, the IOS and the MCC viewed together can help to make investment decisions.

The Investment Opportunity Schedule (IOS)and the MCC Viewed Together Identify