Which of the following statements regarding capital budgeting is correct A firm’s optimal capital budget can be found by moving along its investment opportunity schedule until: （）
A. it exhausts its capital budget.
B. the marginal revenue product is equal to marginal cost.
C. the next project’s return no longer covers the marginal cost of capital.
参考答案：C
解析：
The firm would not want to exhaust its capital budget on "bad" projects, (i. e. projects with IRR＜cost of capital [NPV＜0]). They should continue to invest as long as the project’s return is greater than the marginal cost of capital of the firm. When the project’s IRR=cost of capital, the NPV=0. This project will only make the firm larger; it will add nothing to the stock price. The investment opportunity schedule plots expected project returns from highest to lowest IRR.