Whipple Industries Inc ? the Firm's Marginal Cost of Capital Schedule Is as Optimal

question 49

Multiple Choice

Whipple Industries Inc. is in the process of determining its optimal capital budget for next year. The following investment projects are under consideration: $\begin{array}{lll}& \text { Required } & \text { Expected Rate } \\\text { Project } & \text { Investment } & \text { of Retum }\\\text { A } & \$ 2 \text { million } & 20.0 \% \\\mathrm{~B} & \$ 3 \text { million } & 15.0 \% \\\mathrm{C} & \$ 1 \text { million } & 13.5 \% \\\mathrm{D} & \$ 4 \text { million } & 13.0 \% \\\mathrm{E} & \$ 1 \text { million } & 12.5 \% \\\mathrm{~F} & \$ 3 \text { million } & 12.0 \% \\\mathrm{G} & \$ 5 \text { million } & 11.5 \%\end{array}$ ? The firm's marginal cost of capital schedule is as follows: $\begin{array}{ll}\text { Amount of }\\\text { Funds Raised } & \text { Cost } \\\$ 0-\$ 6 \text { million } & 12.0 \% \\\$ 6 \text { million - } \$ 12 \text { million } & 12.5 \% \\\$ 12 \text { million }-\$ 18 \text { million } & 13.5 \% \\\text { Over } \$ 18 \text { million } & 15.0 \%\end{array}$ ?
Determine Whipple's optimal capital budget (in dollars) for the coming year.

• A) $11 million
• B) $10 million
• C) $5 million
• D) $14 million

---

Definitions:

Lev Vygotsky

Lev Vygotsky was a Soviet psychologist known for his work on cognitive development, particularly the sociocultural theory that emphasizes the role of social interaction in the development of cognition.

Art Teacher

An educator specialized in teaching the concepts, techniques, and history of art.

Cognitive Development

The process by which individuals perceive, think, and gain understanding of their world through the interaction and influence of genetic and learned factors.

Information Processing Perspective

A cognitive psychology approach that likens the human mind to a computer, focusing on how people process, store, encode, and retrieve information.