Investment Opportunity Schedule Graph
I don't understand "Investment Opportunity Schedule Graph"
1 answers ( 0 marked as helpful)
Hi Laith,
Great question! This is a very common point of confusion
The Investment Opportunity Schedule (IOS) is simply a way to rank investment projects by how attractive they are.
Think of it as a ranking of investment projects from best to worst.
Each bar represents a potential investment project. The height of each bar shows the project’s expected return (usually its IRR). Projects are ordered from highest return on the left to lowest return on the right. The width of each bar represents how much capital the project requires
The graph tells us which projects are the most attractive first. It helps compare project returns with the Marginal Cost of Capital (MCC). In simple terms, a company should accept projects up to the point where IRR ≥ MCC
Hope this helps!
Best,
The 365 Team
Great question! This is a very common point of confusion
The Investment Opportunity Schedule (IOS) is simply a way to rank investment projects by how attractive they are.
Think of it as a ranking of investment projects from best to worst.
Each bar represents a potential investment project. The height of each bar shows the project’s expected return (usually its IRR). Projects are ordered from highest return on the left to lowest return on the right. The width of each bar represents how much capital the project requires
The graph tells us which projects are the most attractive first. It helps compare project returns with the Marginal Cost of Capital (MCC). In simple terms, a company should accept projects up to the point where IRR ≥ MCC
Hope this helps!
Best,
The 365 Team