Texas Transport Has Five Possible Investment Projects for the Coming

question 99

Multiple Choice

Texas Transport has five possible investment projects for the coming year.Each project is indivisible.They are: The firm's weighted marginal cost of capital schedule is 12 percent for up to $6 million of investment; 16 percent for between $6 million and $18 million of investment; and above $18 million the weighted cost of capital is 18 percent.The optimal capital budget is

• A)$12 million.
• B)$18 million.
• C)$23 million.
• D)$28 million.

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Definitions:

Potential Risk

The possibility of an event occurring that could negatively affect the accomplishment of objectives.

Potential Impact

A possible effect or outcome that a specific action or event might have on something or someone.

Direct Correlation

A relationship between two variables where an increase or decrease in one variable directly causes the same change in the second variable.

Complexity

The degree to which a project or task is complicated, often influenced by the number of interrelated components, variability, and uncertainty.