Create an IOS chart with the following investment alternatives: Project A has an IRR of 8% and will add $10 million to the capital structure, while Project B adds $12 million of capital but returns 6.5%. Project C has an IRR of 9.3% while requiring $4 million capital and Project D returns 12% on $13.35 million of capital. Finally, Project E yields an IRR of 11.7% on $4 million of capital. The initial WACC is 7.75% with a break point of $13 million where a new WACC of 8.12% occurs. A final breakpoint occurs at $25 million boosting the WACC to 9.25%. Creditors will not extend additional credit beyond $25 million.

To create an IOS chart we rst process the data in to arrange the projects in the increasing IRR, we also include the cumulative capital for all the projects. The table that results is, IOS Unit 4 case 01 14 12 12 11.7 13350000 17350000 21350001; 31350000 43350000 caplta If the break point is 13 million then we could barely fund project D, but if the break point is increased to 25 million dollar, we may be able to fund three projects, namely D, E and C