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Could you please show me how to solves this financial management question attached? 5. Daniela Systems Inc. (DSI) is considering the following independent projects for
Could you please show me how to solves this financial management question attached?
5. Daniela Systems Inc. (DSI) is considering the following independent projects for the coming year: DSI's WACC is 9%, but it adjusts for risk by adding 2% to the WACC for high-risk projects and subtracting 2% for low-risk projects. 1. Which projects should DSI accept if it faces no capital constraints? 2. If DSI can only invest a total of $13 million, which projects should it accept and what would be the dollar size of its capital budget? 3. Suppose DSI 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 DSI uses the same method of risk adjustment, which projects should it now accept and what would be the dollar size of its capital budgetStep by Step Solution
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