Wolsh Company is considering three independent projects, each of which requires a 34 million investment. The estimated internal rete of mtum (dRa) and ceat of capial for theje projects ave prevented below: \begin{tabular}{|c|c|c|} \hline Project H ofogh riak): & Cost of capital =17T & IRH =19% \\ \hline Frovect M (Messum risk)t & Cost of captal =15% & IRR = 10% \\ \hline Project L (Low rish) & Cost of capital = 7W & PR=9% \\ \hline \end{tabular} Open ipreadsheet 8 Residual dividend model B Each project's investment cost $4,000,000 Cost of capital - Cost of capitaly 2.00% 5 IRRM = IRRL 1.00% 6 c D E G 7 Project Cost of Capital Internal Rate of Rotum 8 9 10 11 H (High Risk) M (Medium Risk) 17.00% 19.00% L. (Low Risk) 15.00% 10.00% 7.00% 9.00% 12 Firm's Capital Structure Weights: 13% debt in capital structure, wa 14% common equily in capital structure, Ws 15 16 Net income 17 18 Calculation of Capltal Budget: 19 \begin{tabular}{l|c|} 19 & Project \\ \cline { 2 - 2 } 21 & H (High Risk) \\ 22 & M (Medium Risk) \\ 23 & L (Low Risk) \\ 24 & Total Capital Budget \\ 25 & Calculation of Capital Budget Financed \end{tabular} with Common Equity: 26 Common equity required 27. 28 Calculation of Common Dividends Using Residual Model: 29 Common dividends 50.00% 50.00% $8,469,000 30 31 Calculation of Dividend Payout Ratio: -32 Dividend payout ratio Include in Budget (YIN) Investment Cost Formulas 33 Formulas 34 35 35 36 37 34 39 40 40