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Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment...
eBook
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
10.75%
High
B
5 million
13.25
High
C
3 million
8.75
Low
D
2 million
7.75
Average
E
6 million
11.75
High
F
5 million
11.75
Average
G
6 million
5.75
Low
H
3 million
10.50
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.
Which projects should Ziege accept if it faces no capital
constraints?
Project A
-Select-AcceptRejectItem 1
Project B
-Select-AcceptRejectItem 2
Project C
-Select-AcceptRejectItem 3
Project D
-Select-AcceptRejectItem 4
Project E
-Select-AcceptRejectItem 5
Project F
-Select-AcceptRejectItem 6
Project G
-Select-AcceptRejectItem 7
Project H
-Select-AcceptRejectItem 8
If Ziege can only invest a total of $13 million, which projects
should it accept?
Project A
-Select-AcceptRejectItem 9
Project B
-Select-AcceptRejectItem 10
Project C
-Select-AcceptRejectItem 11
Project D
-Select-AcceptRejectItem 12
Project E
-Select-AcceptRejectItem 13
Project F
-Select-AcceptRejectItem 14
Project G
-Select-AcceptRejectItem 15
Project H
-Select-AcceptRejectItem 16
If Ziege can only invest a total of $13 million, what would be
the dollar size of its capital budget? Enter your answer in
millions. For example, an answer of $10,550,000 should be entered
as 10.55. Round your answer to two decimal places.
$ million
Suppose 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%. Assuming that Ziege
uses the same method of risk adjustment, which projects should it
now accept?
Project A
-Select-AcceptRejectItem 18
Project B
-Select-AcceptRejectItem 19
Project C
-Select-AcceptRejectItem 20
Project D
-Select-AcceptRejectItem 21
Project E
-Select-AcceptRejectItem 22
Project F
-Select-AcceptRejectItem 23
Project G
-Select-AcceptRejectItem 24
Project H
-Select-AcceptRejectItem 25
What would be the dollar size of its capital budget? Enter your
answer in millions. For example, an answer of $10,550,000 should be
entered as 10.55. Round your answer to two decimal places.
$ million
Solutions
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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
13.25%
High
B
5 million
10.75
High
C
3 million
8.75
Low
D
2 million
8.00
Average
E
6 million
11.75
High
F
5 million
11.75
Average
G
6 million
6.00
Low
H
3 million
10.50
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%...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
14.75%
High
B
5 million
12.25
High
C
3 million
10.25
Low
D
2 million
9.50
Average
E
6 million
13.25
High
F
5 million
13.25
Average
G
6 million
7.50
Low
H
3 million
12.75
Low
Ziege's WACC is 10.75%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
12.50%
High
B
5 million
15.00
High
C
3 million
10.50
Low
D
2 million
9.50
Average
E
6 million
13.50
High
F
5 million
13.50
Average
G
6 million
7.50
Low
H
3 million
12.00
Low
Ziege's WACC is 11.00%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
11.25%
High
B
5 million
13.75
High
C
3 million
9.25
Low
D
2 million
9
Average
E
6 million
12.25
High
F
5 million
12.25
Average
G
6 million
7
Low
H
3 million
11
Low
Ziege's WACC is 9.75%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
11.50%
High
B
5 million
14.00
High
C
3 million
9.50
Low
D
2 million
9.25
Average
E
6 million
12.50
High
F
5 million
12.50
Average
G
6 million
7.25
Low
H
3 million
11.50
Low
Ziege's WACC is 10.00%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
12.25%
High
B
5 million
14.75
High
C
3 million
10.25
Low
D
2 million
9.75
Average
E
6 million
13.25
High
F
5 million
13.25
Average
G
6 million
7.75
Low
H
3 million
12.00
Low
Ziege's WACC is 10.75%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
14.25%
High
B
5 million
11.75
High
C
3 million
9.75
Low
D
2 million
9.75
Average
E
6 million
12.75
High
F
5 million
12.75
Average
G
6 million
7.75
Low
H
3 million
11.25
Low
Ziege's WACC is 10.25%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects
for the coming year: Project Required Investment Rate of Return
Risk A $4 million 14.25% High B 5 million 11.75 High C 3 million
9.75 Low D 2 million 8.75 Average E 6 million 12.75 High F 5
million 12.75 Average G 6 million 6.75 Low H 3 million 12.25 Low
Ziege's WACC is 10.25%, but it adjusts for risk by adding 2% to the
WACC for high-risk projects and subtracting 2%...
Required information For four independent projects, the
investment limit is $350, and the following project selection
restriction applies: project 2 can be selected only if project 3 is
selected.
Project
Initial Investment, $
1
250
2
150
3
75
4
235
1) Determine all the acceptable mutually exclusive bundles from
the following.
2) Determine all the nonacceptable mutually exclusive bundles
from the following.
GeoGrocers is considering the following independent,
average-risk investment projects: Project Size of Project Project
IRR Project A $1.0 million 12.0% Project B 1.2 million 11.5%
Project C 1.2 million 11.0% Project D 1.2 million 10.5% Project E
1.0 million 10.0% The company has a target capital structure that
consists of 50 percent debt and 50 percent equity. Its after-tax
cost of debt is 8 percent, its cost of equity is estimated to be
13.5 percent, and its net income is...