# 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?

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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