1. The management of Florida phosphate Industries (FPI) is planning next years capital budget. The companys earning and dividends are growing a constant rate of 5 percent . The company earning and dividend are growing at a constant rate of 5 percent. The last dividend, D0, was $0.90: and the current equilibrium stock price is $7. 73 . The company can raise new debt at a 14 percent before- tax cost. The company is at its optimal capital structure, which is 40 percent debt and 60 percent equity, and the firm marginal tax rate is 40 percent. The company has the following independent , invisible, and equally risky investment opportunities:

Project	Cost	Rate of Return
A	$15,000	17%
B	15,000	16
C	12,000	15
D	20,000	13

What is the company optimal budget