The graph shows the relationship between the internal rate of return (IRR) and the optimal investment outlays (IS) under two different capital structures- local (K l ) and international (K g ). Therefore, option B is the correct choice.

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In the Graph

Question 73

Multiple Choice

In the graph,

A) K^l and K^g represent, respectively, the cost of capital under international and local capital structures; IRR represents the internal rate of return on investment projects; I^l and I^g represent, respectively, the optimal investment outlays under the alternative capital structures.
B) K^l and K^g represent, respectively, the cost of capital under local and international capital structures; IRR represents the internal rate of return on investment projects; I^l and I^g represent the optimal investment outlays under the alternative capital structures.
C) None of the above

Correct Answer: