Corporate Finance exercise: Oprimal capital budget

Raymond manufacturing is considering the following capital projects. The IRR has been calculated for each project:

Aa Aa E. 9. optimal capital budget Raymond Manufacturing is considering the following capital projects. The internal rate of return (IRR) has been calculated for each project. Cost Project (Millions of dollars IRR $30 11.8% $40 11.6% $30 1.2% $60 10.8% The optimal capital budget (OCB) is the budget size that maximizes the firm's wealth given the opportunities for investment and the cost of capital. Raymond's managers have plotted the marginal cost of capital (MCC) schedule to reflect how the cost of capital increases as new capital is raised. Assume that the proposed projects are independent and equally risky and that their risks are equal to Raymond's average existing assets. Tool tip: Mouse over the points on the graph to see their coordinates