Question

The managers of United Medtronics are evaluating the following four projects for the coming budget period. The firm’s corporate cost of capital is 14%.


A. What is the firm’s optimal capital budget?
B. Now, suppose Medtronic’s managers want to consider differential risk in the capitals budgeting process. Project A has a average risk, B has a below average risk, C has above average risk, and D has average risk. What is the firm’s optimal capital budget when differential risk isconsidered?


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  • CreatedMay 23, 2013
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