Business, 02.03.2020 22:53 justkevin1231

Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is considering 7 equal sized capital budgeting projects. Its CFO hired you to assist in deciding whether none, some, or all of the projects should be accepted. You have the following information:
rRF = 4.50%; RPM = 5.50%; and b = 0.93.
The company adds or subtracts a specified percentage to the corporate WACC when it evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below.
If these are the only projects under consideration, how large should the capital budget be?

Risk Expected Cost
Project Risk Factor Return (Millions)

1 Very low -2.00% 7.60% $25.0
2 Low -1.00% 9.15% $25.0
3 Average 0.00% 10.10% $25.0
4 High 1.00% 10.40% $25.0
5 Very high 2.00% 10.80% $25.0
6 Very high 2.00% 10.90% $25.0
7 Very high 2.00% 13.00% $25.0

a) $125 b) $100 c) $25 d) $50 e) $75

Answers: 1

Show answers

Other questions on the subject: Business

Business, 22.06.2019 11:00, HUNIXX6561

Samantha is interested in setting up her own accounting firm and wants to specialize in the area of accounting that has experienced the most significant growth in recent years. which area of accounting should she choose as her specialty? samantha should choose as her specialty.

Answers: 1

continue

Business, 22.06.2019 16:00, yesenia1162

What is used by accountant to analyze transactions ?

Answers: 2

continue

Business, 22.06.2019 22:40, songulakabulut1992

Which of the following will not cause the consumption schedule to shift? a) a sharp increase in the amount of wealth held by households b) a change in consumer incomes c) the expectation of a recession d) a growing expectation that consumer durables will be in short supply

Answers: 1

continue

Business, 23.06.2019 00:40, ovoxotas

The recognition of which of the following expenses exemplifies the application of matching expenses with the revenues they produced? multiple choice(a) cost of goods sold. (b) advertising.(c) president's salary.(d) research and development.

Answers: 3

continue

You know the right answer?

Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is consid...