PLEASE INDICATE WHICH COORDINATES TO PLACE OCB PLACEMARKER ON GRAPH

9. Optimal capital budget Raymond Manufacturing is considering the following capital projects. The internal rate of return (IRR) has been calculated for each project. Project IRR Cost (Millions of dollars) $40 A 11.6% B $40 11.2% $80 10.8% The optimal capital budget (OCB) is the budget size that maximizes the firm's wealth given the opportunities for investment and the cost of capital. Raymond's managers have plotted the marginal cost of capital (MCC) schedule to reflect how the cost of capital increases as new capital is raised. Assume that the proposed projects are independent and equally risky and that their risks are equal to Raymond's average existing assets. The optimal capital budget (OCB) is the budget size that maximizes the firm's wealth given the opportunities for investment and the cost of capital. Raymond's managers have plotted the marginal cost of capital (MCC) schedule to reflect how the cost of capital increases as new capital is raised. Assume that the proposed projects are independent and equally risky and that their risks are equal to Raymond's average existing assets. ? 12.0 11.8 OCB 11.6 11.4 11.2 11.0 H WACC/IRR (PERCENT) 10.8 10.6 10.4 10.2 St 0 20 140 160 40 60 80 100 120 New capital raised ($ MILLIONS) Refer to the preceding graph, and place the black point (plus symbol) at the point that represents the OCB to find the answer. What is Raymond Manufacturing's optimal capital budget? O $120.0 million O $80.0 million $90.0 million O $100.0 million What is the company's weighted average cost of capital (WACC) at the optimal capital budget? O 11.0% O 10.8% O 11.6% 0 12.0%