Alpha Inc Combines the Marginal Cost of Capital (MCC) and the the Investment

Multiple Choice

Alpha Inc. combines the marginal cost of capital (MCC) and the investment opportunity schedules (IOS) on a graph. Which of the following areas on the graph shows the maximum excess of returns over costs?

A) The area that is below the WACC
B) The area that is above the IOS
C) The point of intersection of WACC and IOS
D) All the investment opportunities along the IOS line would have maximum excess of returns over costs.
E) The area that is above the WACC but below the IOS.