The Ajax Corporation has the following set of projects available to it:

*Note: All projects have equal risk.
Ajax can raise funds with the following marginal costs:
First $250 million........... 14.0%
Next 250 million.......... 15.5
Next 100 million.......... 16.0
Next 250 million.......... 16.5
Next 200 million........... 18.0
Next 200 million........... 21.0
Use the marginal cost and marginal revenue concepts developed in this chapter to derive an optimal capital budget forAjax.

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IN VESTMENT REQUIRED EXPECTED RATE OF RETURN PROJECT MILLION) 500 75 50 125 300 150 250 23.0% 18.0 21.0 16.0 14.0 13.0 19.0