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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.

  1. 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-
  2. 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

  3. 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

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