9. pt 1

OPTIMAL CAPITAL BUDGET

Hampton Manufacturing estimates that its WACC is 12.5%. The company is considering the following seven investment projects:

Project	Size	IRR
A	$750,000	14.0%
B	1,250,000	13.5
C	1,250,000	13.2
D	1,250,000	13.0
E	750,000	12.7
F	750,000	12.3
G	750,000	12.2

Assume that each of these projects is independent and that each is just as risky as the firm's existing assets. Which set of projects should be accepted?

Project A	-Select-AcceptDon't acceptItem 1
Project B	-Select-AcceptDon't acceptItem 2
Project C	-Select-AcceptDon't acceptItem 3
Project D	-Select-AcceptDon't acceptItem 4
Project E	-Select-AcceptDon't acceptItem 5
Project F	-Select-AcceptDon't acceptItem 6
Project G	-Select-AcceptDon't acceptItem 7

What is the firm's optimal capital budget? Write out your answer completely. For example, 13 million should be entered as 13,000,000. $