JobberKnoll Semiconductors Inc. (JSI) has the following investment opportunities:
Cost Annual Cash Inflows Life (years)
Project A $ 5,000,000 $1,216,130 6
Project B 13,000,000 2,348,770 8
Project C 10,000,000 1,746,870 14
The optimal capital structure calls for financing all projects with 60.00 percent common equity and 40.00 percent debt. The following information applies to the financial position of JSI. The last dividend was $3.50. The constant growth rate of earnings and dividends is 6.00 percent. The current price per share of common stock is $46. If JS issues new common stock, a flotation cost of 12.00 percent will be incurred. The company can issue debt at a before-tax cost of 12.00 percent. The firm's dividend payout ratio is 30.00 percent, and it is in the 40.00 percent tax bracket. JSI expects net income to equal $15,000,000 for the current year. In which projects (if any) should JSI invest, and what is the firm’s optimal capital budget? Provide an MCC and I0S graphs to support your answer.