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Ziege Systems is considering the following indepen...

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Ziege Systems is considering the following independent projects for the coming year. Project Required Investment Rate of Return Risk -------------------------------------------------------------------------------- A $4 million 14.0% High B 5 million 11.5 High C 3 million 9.5 Low D 2 million 9.0 Average E 6 million 12.5 High F 5 million 12.5 Average G 6 million 7.0 Low H 3 million 11.5 Low Ziege's WACC is 9.25%, but it adjusts for risk by adding 2% to the WACC for high-risk projects and subtracting 2% for low-risk projects. 1) If Ziege can only invest a total of $13 million, what would the dollar size of its capital budget be? Round your answer to two decimal places. Suppose that Ziege can raise additional funds beyond the $13 million, but each new increment (or partial increment) of $5 million of new capital will cause the WACC to increase by 1% (thus, for additional funds up to $5 million WACC will be 11%, WACC for original $13 million will remain unchanged). Assuming Ziege uses the same method of risk adjustment, which projects should it now accept? 2)What amount of additional funds should it raise? Round your answer to two decimal places.,This didnt answer my questions. Question was If Ziege can only invest a total of $13 million, what would the dollar size of its capital budget be? Round your answer to two decimal places. and What amount of additional funds should it raise? Round your answer to two decimal places.,A is still showing up incorrect

 

Paper#7203 | Written in 18-Jul-2015

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