Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate of Return Risk A $4 million 13.25% High B 5 million 10.75 High C 3 million 8.75 Low D 2 million 8.50 Average E 6 million 11.75 High F 5 million 11.75 Average G 6 million 6.50 Low H 3 million 10.50 Low Ziege's WACC is 9.25%, but it adjusts for risk by adding 2% to the WACC for high-risk projects and subtracting 2% for low-risk projects. Which projects should Ziege accept if it faces no capital constraints? Project A accept or reject Project B accept or reject Project C accept or reject Project D accept or reject Project E accept or reject Project F accept or reject Project G accept or reject Project H accept or reject If Ziege can only invest a total of $13 million, which projects should it accept? Project A accept or reject Project B accept or reject Project C accept or reject Project D accept or reject Project E accept or reject Project F accept or reject Project G accept or reject Project H accept or reject If Ziege can only invest a total of $13 million, what would be the dollar size of its capital budget? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places. $ ___ million Suppose Ziege can raise additional funds beyond the $13 million, but each new increment (or partial increment) of $5 million of new capital will cause the WACC to increase by 1%. Assuming that Ziege uses the same method of risk adjustment, which projects should it now accept? Project A accept or reject Project B accept or reject Project C accept or reject Project D accept or reject Project E accept or reject Project F accept or reject Project G accept or reject Project H accept or reject What would be the dollar size of its capital budget? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places. $ ___ million

Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate of Return Risk A $4 million 13.25% High B 5 million 10.75 High C 3 million 8.75 Low D 2 million 8.50 Average E 6 million 11.75 High F 5 million 11.75 Average G 6 million 6.50 Low H 3 million 10.50 Low Ziege's WACC is 9.25%, but it adjusts for risk by adding 2% to the WACC for high-risk projects and subtracting 2% for low-risk projects. Which projects should Ziege accept if it faces no capital constraints? Project A accept or reject Project B accept or reject Project C accept or reject Project D accept or reject Project E accept or reject Project F accept or reject Project G accept or reject Project H accept or reject If Ziege can only invest a total of $13 million, which projects should it accept? Project A accept or reject Project B accept or reject Project C accept or reject Project D accept or reject Project E accept or reject Project F accept or reject Project G accept or reject Project H accept or reject If Ziege can only invest a total of $13 million, what would be the dollar size of its capital budget? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places. $ _ million Suppose Ziege can raise additional funds beyond the $13 million, but each new increment (or partial increment) of $5 million of new capital will cause the WACC to increase by 1%. Assuming that Ziege uses the same method of risk adjustment, which projects should it now accept? Project A accept or reject Project B accept or reject Project C accept or reject Project D accept or reject Project E accept or reject Project F accept or reject Project G accept or reject Project H accept or reject What would be the dollar size of its capital budget? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places. $ _ million

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 17PROB

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Ziege Systems is considering the following independent projects for the coming year:

Project	Required Investment	Rate of Return	Risk
A	$4 million	13.25%	High
B	5 million	10.75	High
C	3 million	8.75	Low
D	2 million	8.50	Average
E	6 million	11.75	High
F	5 million	11.75	Average
G	6 million	6.50	Low
H	3 million	10.50	Low

Ziege's WACC is 9.25%, but it adjusts for risk by adding 2% to the WACC for high-risk projects and subtracting 2% for low-risk projects.

Which projects should Ziege accept if it faces no capital constraints?

Project A	accept or reject
Project B	accept or reject
Project C	accept or reject
Project D	accept or reject
Project E	accept or reject
Project F	accept or reject
Project G	accept or reject
Project H	accept or reject

If Ziege can only invest a total of $13 million, which projects should it accept?

Project A	accept or reject
Project B	accept or reject
Project C	accept or reject
Project D	accept or reject
Project E	accept or reject
Project F	accept or reject
Project G	accept or reject
Project H	accept or reject

If Ziege can only invest a total of $13 million, what would be the dollar size of its capital budget? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places.

$ ___ million

Suppose Ziege can raise additional funds beyond the $13 million, but each new increment (or partial increment) of $5 million of new capital will cause the WACC to increase by 1%. Assuming that Ziege uses the same method of risk adjustment, which projects should it now accept?

Project A	accept or reject
Project B	accept or reject
Project C	accept or reject
Project D	accept or reject
Project E	accept or reject
Project F	accept or reject
Project G	accept or reject
Project H	accept or reject

What would be the dollar size of its capital budget? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places.

$ ___ million

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