Question
Confused by the wording of this question. I'm having trouble arriving at a conclusion. Would truly appreciate any help. Thx! Alpha Inc. combines the marginal
Confused by the wording of this question. I'm having trouble arriving at a conclusion. Would truly appreciate any help. Thx!
Alpha Inc. combines the marginal cost of capital (MCC) schedule with the investment opportunity schedule (IOS) on a single graph. Which of the following areas on the MCC/IOS graph shows the maximum excess of marginal returns over marginal costs?
The area that is below the marginal weighted average cost of capital (MCC) schedule
The area that is above the IOS schedule
The point of intersection of the MCC schedule and the IOS schedule
The point of intersection of weighted average cost of capital (WACC) schedule and y-axis
The area that is above the MCC schedule but below the IOS schedule when the IOS line is above the MCC line
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