Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is considering 7 equal-sized capital budgeting projects. Its CFO hired you to assist in deciding whether none, some, or all of the projects should be accepted. You have the following information: rRF = 4.50%; RPM = 5.50%; and b = 0.98. The company adds or subtracts a specified percentage to the corporate WACC when it evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below. If these are the only projects under consideration, how large should the capital budget be?

Expected Project Risk Risk factor return Cost (millions)

1 Very low -2.00% 7.60% $25.0

2 Low -1.00% 9.15% $25.0

3 Average 0.00% 10.10% $25.0

4 High 1.00% 10.40% $25.0

5 Very high 2.00% 10.80% $25.0

6 Very high 2.00% 10.90% $25.0

7 Very high 2.00% 13.00% $25.0

	a.	$50
	b.	$75
	c.	$25
	d.	$100
	e.	$125