Rolodex Inc. is in the process of determining its capital budget for the next fiscal yea...

Rolodex Inc. is in the process of determining its capital budget for the next fiscal year. The firm’s current capital structure, which it considers to be optimal, is contained in the following balance sheet:

Discussions between the firm’s financial officers and the firm’s investment and commercial bankers have yielded the following information:

a. Compute Rolodex’s marginal cost of capital schedule.

b. Given the following investment opportunity schedule, determine Rolodex’s optimal capital budget.