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: r_RF = 4.50%; RP_M = 5.50%; and b = 0.92. 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?

		Risk	Expected	Cost
Project	Risk	Factor	Return	(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. $ 25

c. $ 75

d. $100

e. $ 0