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eBook 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

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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 8.25 Average
E 6 million 11.75 High
F 5 million 11.75 Average
G 6 million 6.25 Low
H 3 million 10.25 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 -Select-AcceptRejectItem 1
Project B -Select-AcceptRejectItem 2
Project C -Select-AcceptRejectItem 3
Project D -Select-AcceptRejectItem 4
Project E -Select-AcceptRejectItem 5
Project F -Select-AcceptRejectItem 6
Project G -Select-AcceptRejectItem 7
Project H -Select-AcceptRejectItem 8

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

Project A -Select-AcceptRejectItem 9
Project B -Select-AcceptRejectItem 10
Project C -Select-AcceptRejectItem 11
Project D -Select-AcceptRejectItem 12
Project E -Select-AcceptRejectItem 13
Project F -Select-AcceptRejectItem 14
Project G -Select-AcceptRejectItem 15
Project H -Select-AcceptRejectItem 16

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 -Select-AcceptRejectItem 18
Project B -Select-AcceptRejectItem 19
Project C -Select-AcceptRejectItem 20
Project D -Select-AcceptRejectItem 21
Project E -Select-AcceptRejectItem 22
Project F -Select-AcceptRejectItem 23
Project G -Select-AcceptRejectItem 24
Project H -Select-AcceptRejectItem 25

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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