Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate...
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% for low-risk
projects.
Which projects should Ziege accept if it faces no capital
constraints?
Project A
-Select-
Project B
-Select-
Project C
-Select-
Project D
-Select-
Project E
-Select-
Project F
-Select-
Project G
-Select-
Project H
-Select-
If Ziege can only invest a total of $13 million, which projects
should it accept?
Project A
-Select-
Project B
-Select-
Project C
-Select-
Project D
-Select-
Project E
-Select-
Project F
-Select-
Project G
-Select-
Project H
-Select-
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-
Project B
-Select-
Project C
-Select-
Project D
-Select-
Project E
-Select
Project F
-Select-
Project G
-Select-
Project H
-Select-
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
Expert Solution
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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 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%...
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...
You are considering two independent
projects. The required rate of return is 13.75 percent for Project
A and 14.25 percent for Project B. Project A has an initial cost of
$51,400 and cash inflows of $21,400, $24,900, and $22,200 for Years
1 to 3, respectively. Project B has an initial cost of $38,300 and
cash inflows of $23,000 a year for 2 years. Which project(s), if
either, should you accept?
Accept both A and B
Reject both A and B...
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.