9. Marginal cost of capital (MCC) schedule

As a company raises more and more funds, the cost of those funds begins to rise. As this occurs, the weighted cost of each new dollar rises. This is called the marginal cost of capital. A graph that shows how the weighted cost of capital changes as more new capital is raised by the firm is called the MCC (marginal cost of capital) schedule.

Use the MCC schedule to complete the sentences that follow.

If this company raises $100M, its weighted cost of capital is ________.

The breakpoints in the MCC schedule occur at __________of newly raised capital.

Use the cost of capital schedules to select which firm is presented in the MCC schedule.

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