The correct answer is A. optimal capital budget.
A capital budget is a financial plan for a company’s future investments in fixed assets, such as machinery, equipment, and buildings. The optimal capital budget is the set of projects or investments that maximizes the firm’s value.
The minimum capital budget is the set of projects that are necessary to maintain the firm’s current level of operations. The maximum capital budget is the set of projects that the firm could undertake if it had unlimited resources.
A greater capital budget is a set of projects that costs more than the optimal capital budget. This could be the case if the firm is willing to take on more risk in order to increase its potential returns. However, it is important to note that a greater capital budget does not always lead to a higher firm value. In fact, if the firm takes on too much risk, it could actually decrease its value.
Therefore, the optimal capital budget is the set of projects that maximizes the firm’s value. This is the set of projects that the firm should undertake, given its current financial situation and risk tolerance.