subject
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

ansver
Answers: 1

Other questions on the subject: Business

image
Business, 21.06.2019 22:40, ipcmeaganlatham
wilson's has 10,000 shares of common stock outstanding at a market price of $35 a share. the firm also has a bond issue outstanding with a total face value of $250,000 which is selling for 102 percent of face value. the cost of equity is 11 percent while the preminustax cost of debt is 8 percent. the firm has a beta of 1.1 and a tax rate of 34 percent. what is wilson's weighted average cost of capital?
Answers: 3
image
Business, 22.06.2019 10:30, darius7967
True or false: a fitted model with more predictors will necessarily have a lower training set error than a model with fewer predictors.
Answers: 2
image
Business, 22.06.2019 15:20, lamashermosa23
On january 2, 2018, bering co. disposes of a machine costing $34,100 with accumulated depreciation of $18,369. prepare the entries to record the disposal under each of the following separate assumptions. exercise 8-24a part 2 2. the machine is traded in for a newer machine having a $50,600 cash price. a $16,238 trade-in allowance is received, and the balance is paid in cash. assume the asset exchange has commercial substance.
Answers: 2
image
Business, 22.06.2019 19:00, HahaHELPP
Gus needs to purée his soup while it's still in the pot. what is the best tool for him to use? a. potato masher b. immersion blender c. rotary mixer d. whisk
Answers: 2
You know the right answer?
Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is consid...

Questions in other subjects:

Konu
History, 09.06.2021 21:10
Konu
Business, 09.06.2021 21:10
Konu
Mathematics, 09.06.2021 21:10