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##### "The mangers of United Medtronics?s are evaluating...

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"The mangers of United Medtronics?s are evaluating the following four projects for the coming budget period. The firm?s corporate cost of capital is 14 percent. Project Cost IRR A $15,000 17% B 15,000 16 C 12,000 15 D 20,000 13 a. What is the firm's optimal capital budget? b. Now, suppose Medtronic's managers want to consider differential risk in the capital budgeting process. Project A has average risk, B has below-average risk, C has above-average risk, and D has average risk. What is the firm's optimal capital budget when differential risk is considered? (Hint: The firm's managers lower the IRR of high-risk projects by 3 percentage points and raise the IRR of low-risk projects by the same amount.),Thanks Rachel, Can you give the formula you used to solved question A? Also can you show how you got 2550 and I will do the rest. Thanks again.

Paper#4072 | Written in 18-Jul-2015

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