Vang Enterprises, which is debt-free and finances only with equity from retained

Question

Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is considering 7 equal sized capital budgeting projects. Its CFO hired you to assist in deciding whether none, some, or all of the projects should be accepted. You have the following information: rRF = 4.50%; RPM = 5.50%; and b = 0.92. The company adds or subtracts a specified percentage to the corporate WACC when it evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below. If these are the only projects under consideration, how large should the capital budget be? Risk Expected Cost Project Risk Factor Return (Millions) 1 Very low ?2.00% 7.60% $25.0 2 Low ?1.00% 9.15% $25.0 3 Average 0.00% 10.10% $25.0 4 High 1.00% 10.40% $25.0 5 Very high 2.00% 10.80% $25.0 6 Very high 2.00% 10.90% $25.0 7 Very high 2.00% 13.00% $25.0 a. $ 50 b. $ 25 c. $ 75 d. $100 e. $ 0 Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is considering 7 equal sized capital budgeting projects. Its CFO hired you to assist in deciding whether none, some, or all of the projects should be accepted. You have the following information: rRF = 4.50%; RPM = 5.50%; and b = 0.92. The company adds or subtracts a specified percentage to the corporate WACC when it evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below. If these are the only projects under consideration, how large should the capital budget be? Risk Expected Cost Project Risk Factor Return (Millions) 1 Very low ?2.00% 7.60% $25.0 2 Low ?1.00% 9.15% $25.0 3 Average 0.00% 10.10% $25.0 4 High 1.00% 10.40% $25.0 5 Very high 2.00% 10.80% $25.0 6 Very high 2.00% 10.90% $25.0 7 Very high 2.00% 13.00% $25.0 a. $ 50 b. $ 25 c. $ 75 d. $100 e. $ 0 Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is considering 7 equal sized capital budgeting projects. Its CFO hired you to assist in deciding whether none, some, or all of the projects should be accepted. You have the following information: rRF = 4.50%; RPM = 5.50%; and b = 0.92. The company adds or subtracts a specified percentage to the corporate WACC when it evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below. If these are the only projects under consideration, how large should the capital budget be? Risk Expected Cost Project Risk Factor Return (Millions) 1 Very low ?2.00% 7.60% $25.0 2 Low ?1.00% 9.15% $25.0 3 Average 0.00% 10.10% $25.0 4 High 1.00% 10.40% $25.0 5 Very high 2.00% 10.80% $25.0 6 Very high 2.00% 10.90% $25.0 7 Very high 2.00% 13.00% $25.0 a. $ 50 b. $ 25 c. $ 75 d. $100 e. $ 0 Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is considering 7 equal sized capital budgeting projects. Its CFO hired you to assist in deciding whether none, some, or all of the projects should be accepted. You have the following information: rRF = 4.50%; RPM = 5.50%; and b = 0.92. The company adds or subtracts a specified percentage to the corporate WACC when it evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below. If these are the only projects under consideration, how large should the capital budget be? Risk Expected Cost Project Risk Factor Return (Millions) 1 Very low ?2.00% 7.60% $25.0 2 Low ?1.00% 9.15% $25.0 3 Average 0.00% 10.10% $25.0 4 High 1.00% 10.40% $25.0 5 Very high 2.00% 10.80% $25.0 6 Very high 2.00% 10.90% $25.0 7 Very high 2.00% 13.00% $25.0 a. $ 50 b. $ 25 c. $ 75 d. $100 e. $ 0 Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is considering 7 equal sized capital budgeting projects. Its CFO hired you to assist in deciding whether none, some, or all of the projects should be accepted. You have the following information: rRF = 4.50%; RPM = 5.50%; and b = 0.92. The company adds or subtracts a specified percentage to the corporate WACC when it evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below. If these are the only projects under consideration, how large should the capital budget be? Risk Expected Cost Project Risk Factor Return (Millions) 1 Very low ?2.00% 7.60% $25.0 2 Low ?1.00% 9.15% $25.0 3 Average 0.00% 10.10% $25.0 4 High 1.00% 10.40% $25.0 5 Very high 2.00% 10.80% $25.0 6 Very high 2.00% 10.90% $25.0 7 Very high 2.00% 13.00% $25.0 Risk Expected Cost Project Risk Factor Return (Millions) 1 Very low ?2.00% 7.60% $25.0 2 Low ?1.00% 9.15% $25.0 3 Average 0.00% 10.10% $25.0 4 High 1.00% 10.40% $25.0 5 Very high 2.00% 10.80% $25.0 6 Very high 2.00% 10.90% $25.0 7 Very high 2.00% 13.00% $25.0

Explanation / Answer

d. $100

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.