1) Considering the four projects that we discussed and last sessions calculations for WACC1, WACC2 and Retained earnings breakpoint, what is the firms optimal capital budget?

Project A has a cost of $750,000 and an IRR of 11.63%

Project B has a cost of $1,200,000 and an IRR of 13.03%

Project C has a cost of $800,000 and an IRR of 12.43%

Project D has a cost of $300,000 and an IRR of 11.61%

2) Given the following information about two mutually exclusive projects, calculate each projects IRR and NPV and provide your acceptance/rejection decision (assuming a WACC of 10%).

Time X Y

0 -1 -100

1 1.80 160

3) Calculate the MIRR for the following project cash flows (assuming a WACC of 12%)

CF0 = -500

CF1 = 300

CF2 = 400

CF3 = -100

CF4 = 50

CF5 = 250

CF6 = -30