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Managers of Festivus Inc. are determining the company's optimal capital budget for the next year. Festivus is considering the following projects: Project Size Rate of

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Managers of Festivus Inc. are determining the company's optimal capital budget for the next year. Festivus is considering the following projects: Project Size Rate of Return Risk A $200,000 15% High B 500,000 13% High 400,000 10.5% Average D 300,000 14% High E 100,000 9% Average F 200,000 7.5% Low G 400,000 7% Low Festivus estimates that its WACC is 10%. All projects are independent. The company adjusts for risk by adding 2% to the WACC for high-risk projects and subtracting 2% from the WACC for low-risk projects. Festivus should accept projects A, B, C, D. True False

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