Which of the projects will the company accept? (a) No budget limitation (b) subject to budget Project Risk- adjusted WACC Required investment (in millions) S200 NPV (in Profitability millions) Index Ranking Available Capital Ranking A H. $50 B H. 45 L. 40 100 150 130 125 D A. 30 E H. 20 F 100 A 15 G 50 L 10 H 120 L -5 Except for projects A and B are mutually exclusive, all the other projects are independent. . 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. - The company has a limited capital budget of $530 Select one: a. A B, D, F. G O b. A, B, D, F c. B, C, D, E d. B, D, F, G O e. B, C, D, F, G Which of the following statements about the cost of capital is INCORRECT? Select one: O a. WACC should be calculated based on the book value. Ob The reason we must assign a cost of capital to retained earnings involves the opportunity cost principle. . WACC should be calculated based on the marginal costs instead of the historical costs. O d. Weighted average cost of capital calculations should be focused on the after-tax costs. O. A company's target capital structure affects its weighted average cost of capital. Which of the following statements about the cost of capital is INCORRECT? Select one: O a. Ob . The WACC of a firm will increase when investors become more risk averse. Both the cost of debt and equity financing will increase when a firm increases its debt/asset ratio. Both the cost of debt and equity financing will increase when a company merges with another firm whose earnings are counter-cyclical both to those of the first firm and those to the stock market. If a company's tax rate increases, then, all else equal, its weighted average cost of capital will decrease. Both the cost of debt and equity financing will increase when the Federal Reserve tightens credit. Od Oe Hart Enterprises has preferred stock outstanding that pays a dividend of $15 at the end of each year. The preferred stock sells for $105.82 a share. What is the preferred stock's predicted rate of return? Select one: O a 14.18% 9.45% Ob O c. 8.80% O d. 13.25% O e. 11.36%