Now, suppose Medtronic's managers want to consider differential risk in the capital budgeting process. Project A has average risk, B has below average risk, C has above average risk, and D has average risk. What is the firm's optimal capital budget when differential risk is considered? (Hint: the firm's managers adjust for riskiness by adjusting the IRR by plus or minus 3 percentage points.)

The managers of United Medtronics are evaluating the following four projects for the coming budget period. The firm's corporate cost of capital is 14%. Project Cost IRR A $15,000 17% 15,000 11 C 2,000 15 D 20,000 13 Answer the following questions