The managers of Kenforest Grocers are trying to determine the company's optimal capital budget for the upcoming year. Kenforest is considering projects A, B, C, D, and E and has determined the marginal cost of capital schedule given below:

Net

Project Investment IRR

A $200,000 13.9%

B $300,000 14.2%

C $300,000 13.8%

D $100,000 15.5%

E $150,000 13.0%

Marginal Cost of Capital

0 - $500,000 12.8%

Over $500,000 - $800,000 13.4%

Over $800,000 - $1,000,000 13.8%

Over $1,000,000 15%

What is the firm's optimal capital budget?

A.

Accept projects B and D only.

B.

Accept projects A, B, and D only.

C.

Accept projects A, B, C, and D only.

D.

Accept all projects.

E.

Accept projects A and B only.