Use the concepts of marginal cost and marginal revenue to derive an optimal capital budget for Company X, which has identified 7 possible investment projects and determined its cost of capital as shown below.
Alternative Projects, Required Investments, and Expected Rate of Return
Project Investment Required in Millions of Dollars Expected Rate of Return on Investment
A 150 12%
B 300 15%
C 125 10%
D 75 16%
E 50 20%
F 500 14%
G 250 18%