A graph of a firm's acceptable capital projects ranked in the order of the projects' internal rates of return is called the firm's _____.
A) marginal cost of capital schedule
B) investment opportunity schedule
C) modified internal rate of return schedule
D) internal project classification schedule
E) optimal capital budget schedule

Question

Quizplus · Accepted Answer

An investment opportunity schedule shows the acceptable capital projects of a firm ranked according to their internal rates of return (IRRs), allowing the firm to choose the most profitable projects to invest in. Marginal cost of capital schedule refers to the cost of additional capital raised by the firm, modified internal rate of return schedule considers the reinvestment rate assumption, internal project classification schedule does not exist, and optimal capital budget schedule refers to the combination of selected projects that maximizes the firm's value.

A Graph of a Firm's Acceptable Capital Projects Ranked in the Order