Company optimal capital budget for the upcoming year

Problem: Managers are trying to determine the company's optimal capital budget for the upcoming year. The company is considering the following projects:

Project    Size    Rate of Return    Risk
A    $ 200,000         16%             High
B       500,000         14             Average
C       400,000         12                Low
D       300,000         11                High
E       100,000          10             Average
F        200,000         10                Low
G       400,000          7                 Low

The company estimates that its WACC is 11 percent. All projects are independent. The company adjusts for risk by adding 2 percentage points to the WACC for high-risk projects and subtracting 2 percentage points from the WACC for low-risk projects. Which of the projects will the company accept?

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Finance Basics: Company optimal capital budget for the upcoming year
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