Grainger Corp., a supplier of fitness equipment, is trying to decide whether to undertake any or all of the proposed projects in its investment opportunities schedule (IOS). The firm€™s cost-of-capital schedule and investment opportunities schedules follow below.

a. Complete the cost-of-capital schedule by calculating the WACC and the WMCC schedule for the various ranges of total new financing.
b. Identify those projects that you recommend that Grainger Corp. undertake in the next year.
c. Illustrate your recommendations by drawing a graph of Grainger€™s weighted average costs and investment opportunities.
d. Explain why certain projects are recommended and other(s) arenot.

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Rangc of totäl new inancingSourceWeight Afer-ax cost 6.3% 12.S 15.3 Debt Preferred stock Common:s Debr Preterrea stock Common stock Debt Preferred stock Common stock ,50 .10 40 50 10 40 .50 10 40 0-$600,000 6.3% 12.5 16.4 $600,000-$1,000,000 7.8% 12.5 16.4 51,000,000 and above vestment Op Scheduie nternal rate oppoctinity Project H Project G Project K Project M 14,5% 13.0 12.8 11.4 $200,000 700,000 500,000 600,000