Problem 10 Ziege Systems is considering the following independent projects for the coming year Project Required Investment Rate of Return Risk A $4 million 11 25 High B 5 million 13 75 High C 3 million 9 25 Low D 2 million 9 25 Average E 6 million 12 25 High F 5 million 12 25 Average G 6 million 7 25 Low H 3 million 11 00 Low A Ziege's WACC is 9 75 , but it adjusts for risk by adding 2 to the WACC for high risk projects and subtracting 2 for low risk projects Which projects should Ziege accept if it faces no capital constraints Project A Select AcceptRejectItem 1 Project B Select AcceptRejectItem 2 Project C Select AcceptRejectItem 3 Project D Select AcceptRejectItem 4 Project E Select AcceptRejectItem 5 Project F Select AcceptRejectItem 6 Project G Select AcceptRejectItem 7 Project H Select AcceptRejectItem 8 Reject or Accept option above B Which projects should Ziege accept if it faces no capital constraints Project A Select AcceptRejectItem 1 Project B Select AcceptRejectItem 2 Project C Select AcceptRejectItem 3 Project D Select AcceptRejectItem 4 Project E Select AcceptRejectItem 5 Project F Select AcceptRejectItem 6 Project G Select AcceptRejectItem 7 Project H Select AcceptRejectItem 8 If Ziege can only invest a total of $13 million, what would be the dollar size of its capital budget Enter your answer in millions For example, an answer of $10,550,000 should be entered as 10 55 Round your answer to two decimal places $ million C Suppose Ziege can raise additional funds beyond the $13 million, but each new increment (or partial increment) of $5 million of new capital will cause the WACC to increase by 1 Assuming that Ziege uses the same method of risk adjustment, which projects should it now accept Project A Select AcceptRejectItem 18 Project B Select AcceptRejectItem 19 Project C Select AcceptRejectItem 20 Project D Select AcceptRejectItem 21 Project E Select AcceptRejectItem 22 Project F Select AcceptRejectItem 23 Project G Select AcceptRejectItem 24 Project H Select AcceptRejectItem 25 What would be the dollar size of its capital budget Enter your answer in millions For example, an answer of $10,550,000 should be entered as 10 55 Round your answer to two decimal places $ million

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Problem 10 Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate of Return Risk A $4 million 11.25%

Problem 10

Ziege Systems is considering the following independent projects for the coming year:

Project	Required Investment	Rate of Return	Risk
A	$4 million	11.25%	High
B	5 million	13.75	High
C	3 million	9.25	Low
D	2 million	9.25	Average
E	6 million	12.25	High
F	5 million	12.25	Average
G	6 million	7.25	Low
H	3 million	11.00	Low

A. Ziege's WACC is 9.75%, but it adjusts for risk by adding 2% to the WACC for high-risk projects and subtracting 2% for low-risk projects.

Which projects should Ziege accept if it faces no capital constraints?

Project A	-Select-AcceptRejectItem 1
Project B	-Select-AcceptRejectItem 2
Project C	-Select-AcceptRejectItem 3
Project D	-Select-AcceptRejectItem 4
Project E	-Select-AcceptRejectItem 5
Project F	-Select-AcceptRejectItem 6
Project G	-Select-AcceptRejectItem 7
Project H	-Select-AcceptRejectItem 8

Reject or Accept option above

B. Which projects should Ziege accept if it faces no capital constraints?

Project A	-Select-AcceptRejectItem 1
Project B	-Select-AcceptRejectItem 2
Project C	-Select-AcceptRejectItem 3
Project D	-Select-AcceptRejectItem 4
Project E	-Select-AcceptRejectItem 5
Project F	-Select-AcceptRejectItem 6
Project G	-Select-AcceptRejectItem 7
Project H	-Select-AcceptRejectItem 8

If Ziege can only invest a total of $13 million, what would be the dollar size of its capital budget? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places.

$ ---------- million

C. Suppose Ziege can raise additional funds beyond the $13 million, but each new increment (or partial increment) of $5 million of new capital will cause the WACC to increase by 1%. Assuming that Ziege uses the same method of risk adjustment, which projects should it now accept?

Project A	-Select-AcceptRejectItem 18
Project B	-Select-AcceptRejectItem 19
Project C	-Select-AcceptRejectItem 20
Project D	-Select-AcceptRejectItem 21
Project E	-Select-AcceptRejectItem 22
Project F	-Select-AcceptRejectItem 23
Project G	-Select-AcceptRejectItem 24
Project H	-Select-AcceptRejectItem 25

What would be the dollar size of its capital budget? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places.

$ -------------------- million