Coleman's director of capital budgeting has identified the following potential projects:
Project
Cost
Life
Cash Flow
IRR
A
$700,000
5 years
$218,795
17.0%
B
500,000
5
152,705
16.0%
C
800,000
5
219,185
11.5%
All projects are independent and are equally risky.
12) (8 points) Plot the investment opportunity schedule (IOS) on the same graph that contains your
MCC schedule in question (10). What is the firm's marginal cost of capital for capital budgeting
purposes?