Financial Information

At the end of 2015, the Company had net income of $79,893 and total asset was $1,017,032; consisting of $711,922, from to energy segment and $305,110 from transportation services.

On the basis of its net income, Woods wants to know how much money is available for capital investments as shown in Table 2. Its established common stocks dividend payout ratio after the preferred stock dividends payment is 50 percent of the funds. Currently the preferred stock has a 8 percent dividend yield with a par value of $100. A 12 percent cost of capital for funds generated internally has been used in the past, and Woods sees no reason to depart from this figure. Any additional funds used for capital budgeting purposes will have to come from external financing. In discussions with the Woods brothers, Woods informed them that any additional external funds will have a 14 percent rather than the 12 percent current cost of capital. Capital budget committee says they have $45 million in capital expenditures from its 2 divisons.

Question: How much of the internal funds is available for investment?

Table 2:

Table 2- Projects:	Energy	Transportation	Energy	Energy	Energy	Energy	Energy	Transportation	Transportation	Energy
Investment	($4,000,000)	($3,000,000)	($3,000,000)	($4,000,000)	($7,000,000)	($4,000,000)	($5,000,000)	($5,000,000)	($5,000,000)	($5,000,000)
Project Life
1	$750,000	$1,250,000	$550,000	$1,250,000	$1,500,000	$2,000,000	$2,250,000	$900,000	$1,500,000	$500,000
2	$750,000	$975,000	$550,000	$1,250,000	$1,500,000	$2,000,000	$2,250,000	$900,000	$1,400,000	$650,000
3	$750,000	$750,000	$550,000	$1,250,000	$1,500,000	$1,500,000	$2,250,000	$900,000	$1,300,000	$750,000
4	$750,000	$650,000	$550,000	$1,000,000	$1,500,000			$900,000	$1,000,000	$800,000
5	$750,000	$500,000	$550,000	$1,000,000	$1,500,000			$900,000	$750,000	$900,000
6	$750,000	$450,000	$550,000	$1,000,000	$1,500,000			$900,000	$650,000	$1,000,000
7	$750,000		$550,000		$1,500,000			$900,000	$500,000	$1,100,000
8	$750,000		$550,000		$1,500,000			$900,000	$450,000	$1,500,000
9	$750,000		$550,000					$900,000	$300,000	$1,750,000
10	$750,000		$550,000					$900,000	$300,000	$2,000,000