19. ADJUSTING COST OF CAPITAL FOR RISK Ziege Systems is considering the following independent projects for the coming year: Project Required Investment $4 million 5 million 3 million 2 million 6 million 5 million 6 million 3 million CDEFGH Rate of Return 14.0% 11.5 9.5 9.0 12.5 12.5 7.0 11.5 Risk High High Low Average High Average Low Low Ziege's WACC is 10%, 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? If Ziege can only invest a total of $13 million, which projects should it accept, and what would be the dollar size its capital budget? 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, and what would be the dollar size of its capital budget?

19. AD JUSTING COST OF CAPITAL FOR RISK Ziege Systems is considering the following independent projects for the coming year: Ziege's WACC is 10%, 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? If Ziege can only invest a total of $13 million, which projects should it accept, and what would be the dollar size of its capital budget? 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, and what would be the dollar size of its capital budget