Texas Transport has five possible investment projects for the coming year. Each project is

indivisible.

They are:
Project Investment (million) IRR
A $6 18%
B $10 15%
C $9 20%
D $4 12%
E $3 24%
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) $28 million. B) $23 million. C) $18 million. D) $12 million.


C

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