The optimal capital budget is indicated by the point at which the ____ and the ____ intersect.

Question

Quizplus · Accepted Answer

The investment opportunity curve represents the available projects with their respective rates of return whereas the marginal cost of capital curve indicates the cost of capital for additional investments. The optimal capital budget is the point at which these curves intersect, indicating the highest return for the lowest cost. Option B correctly mentions these curves.

The Optimal Capital Budget Is Indicated by the Point at Which