CFA Practice Question

There are 233 practice questions for this study session.

CFA Practice Question

A company's optimal capital budget is best described as the amount of new capital required to undertake all projects with an internal rate of return greater than the ______.
A. cost of new debt capital
B. marginal cost of capital
C. weighted average cost of capital
Explanation: The optimal capital budget is the amount of new capital required to undertake all investment projects with an IRR greater than the marginal cost of capital.

User Contributed Comments 2

User Comment
ewantanner The marginal cost of capital will be greater than the WACC.
nmech1984 wacc=mcc, isnt it? then why C is wrong?
You need to log in first to add your comment.