part A

part B

Marble Construction estimates that its WACC is 8% If equity comes from retained earnings. However, if the company issues new stock to raise new equity, it estimates that its WACC will rise to 8.5%. The company believes that it will exhaust its retained earnings at $2,400,000 of capital due to the number of highly profitable projects available to the firm and its limited earnings. The company is considering the following seven investment projects: Project Size IRR A $ 700,000 14.0% B 1,100,000 13.5 1,040,000 9.0 D 1,200,000 8.1 E 470,000 8.8 F 700,000 7.7 G 650,000 7.6 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 -Select v Project Select Project D -Select Project E -Select Project F -Select Project G -Select- v What is the firm's optimal capital budget? Round your answer to the nearest dollar $ You must evaluate the purchase of a proposed spectrometer for the R&D department. The purchase price of the spectrometer including modifications is $250,000, and the equipment will be fully depreciated at the time of purchase. The equipment would be sold after 3 years for $45,000. The equipment would require a $5,000 increase in net operating working capital (spare parts inventory). The project would have no effect on revenues, but it should save the firm $30,000 per year in before tax labor costs. The firm's marginal federal-plus-state tax rate is 25%. a. What is the initial investment outlay for the spectrometer, that is what is the Year O project cash flow? Enter your answer as a positive value. Round your answer to the nearest dollar. $ 2 b. What are the project's annual cash flows in Years 1, 2, and 3? Do not round Intermediate calculations. Round your answers to the nearest dollar Year 1: $ Year 2: $ Year 3: $ B c. If the WACC Is 10%, should the spectrometer be purchased? -Select