Project Required Investment NPV Profitability Index Budget limit Ranking

A $200 $50

B $70 $45

C $150 $40

D $30 $30

E $120 $20

F $100 $15

G $50 $10

H $100 $5

Scenario 4:

Except for projects C and D are mutually exclusive, all the other projects are independent.

• Project A and C are high-risk project; project B and F are average-risk projects; while project D, E, and G are low-risk project.
• The company estimates that its WACC is 10.5%. The company adjusts for risk by adding 2 percentage points to the WACC for high-risk projects, and subtracting 2 percentage points from the WACC for low-risk projects.
• capital budget of $500.

Select one:

a.A, B, D, G

b.A, B, D, E, G, H

c.A, B, D, F, H

d.A, B, C

e.B, D, F, H