Hampton Manufacturing estimates that its WACC is 12 1 The company is considering the following seven investment projects Project Size IRR A $ 800,000 13 5 B 1,200,000 13 0 C 1,200,000 12 7 D 1,350,000 12 5 E 650,000 12 4 F 650,000 11 8 G 750,000 11 7 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 Round your answer to the nearest dollar $ Now, assume that Projects C and D are mutually exclusive Project D has an NPV of $350,000, whereas Project C has an NPV of $300,000 Which set of projects should be accepted Project A Select acceptdon't acceptItem 9 Project B Select acceptdon't acceptItem 10 Project C Select acceptdon't acceptItem 11 Project D Select acceptdon't acceptItem 12 Project E Select acceptdon't acceptItem 13 Project F Select acceptdon't acceptItem 14 Project G Select acceptdon't acceptItem 15 What is the firm's optimal capital budget in this case Write out your answer completely For example, 13 million should be entered as 13,000,000 Round your answer to the nearest dollar $ Ignore previous part, and now assume that each of the projects is independent but that management decides to incorporate project risk differentials Management judges Projects B, C, D, and E to have average risk, Project A to have high risk, and Projects F and G to have low risk The company adds 2 to the WACC of those projects that are significantly more risky than average, and it subtracts 2 from the WACC for those that are substantially less risky than average Which set of projects should be accepted Project A Select acceptdon't acceptItem 17 Project B Select acceptdon't acceptItem 18 Project C Select acceptdon't acceptItem 19 Project D Select acceptdon't acceptItem 20 Project E Select acceptdon't acceptItem 21 Project F Select acceptdon't acceptItem 22 Project G Select acceptdon't acceptItem 23 What is the firm's optimal capital budget in this case Write out your answer completely For example, 13 million should be entered as 13,000,000 Round your answer to the nearest dollar $

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Hampton Manufacturing estimates that its WACC is 12.1%. The company is considering the following seven investment projects: Project Size IRR A $ 800,000 13.5 %

Hampton Manufacturing estimates that its WACC is 12.1%. The company is considering the following seven investment projects:

Project	Size		IRR

A		$ 800,000	13.5	%
B		1,200,000	13.0
C		1,200,000	12.7
D		1,350,000	12.5
E		650,000	12.4
F		650,000	11.8
G		750,000	11.7

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. Round your answer to the nearest dollar. $

Now, assume that Projects C and D are mutually exclusive. Project D has an NPV of $350,000, whereas Project C has an NPV of $300,000. Which set of projects should be accepted?

Project A	-Select-acceptdon't acceptItem 9
Project B	-Select-acceptdon't acceptItem 10
Project C	-Select-acceptdon't acceptItem 11
Project D	-Select-acceptdon't acceptItem 12
Project E	-Select-acceptdon't acceptItem 13
Project F	-Select-acceptdon't acceptItem 14
Project G	-Select-acceptdon't acceptItem 15

What is the firm's optimal capital budget in this case? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. $

Ignore previous part, and now assume that each of the projects is independent but that management decides to incorporate project risk differentials. Management judges Projects B, C, D, and E to have average risk, Project A to have high risk, and Projects F and G to have low risk. The company adds 2% to the WACC of those projects that are significantly more risky than average, and it subtracts 2% from the WACC for those that are substantially less risky than average. Which set of projects should be accepted?

Project A	-Select-acceptdon't acceptItem 17
Project B	-Select-acceptdon't acceptItem 18
Project C	-Select-acceptdon't acceptItem 19
Project D	-Select-acceptdon't acceptItem 20
Project E	-Select-acceptdon't acceptItem 21
Project F	-Select-acceptdon't acceptItem 22
Project G	-Select-acceptdon't acceptItem 23

What is the firm's optimal capital budget in this case? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar. $