OPTIMAL CAPITAL BUDGET Hampton Manufacturing estimates that its WACC is 12.5%. The company is considering the following seven investment projects Project Size $750,000 1,250,000 1,250,000 1,250,000 750,000 750,000 750,000 IRR 14.0% 13.5 13.2 13.0 12.7 12.3 12.2 a. 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 Project B Project C Project D Project E Project F Project G What is the firm's optimal capital budget? Write out your answer completely. For example, 13 million should be entered as 13,000,000 Select Select Select Select Select b. Now assume that Projects C and D are mutually exclusive. Project D has an NPV of $400,000, whereas Project Chas an NPV of $350,000. Which set of projects should be accepted? Project A Project B Project C Project D Project E Project F Project G 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. c. Ignore Part b 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 o 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 of those pro ects that are substantial y less risky than average which set of projects should be accapted? Project A Project B Project C Project D Project E Project F Project G 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