Question: Marble Construction estimates that its WACC is 1 2 % if equity comes from retained earnings. However, if the company issues new stock to raise
Marble Construction estimates that its WACC is if equity comes from retained earnings. However, if the company issues new stock to raise new equity, it estimates that its WACC will rise to The company believes that it will exhaust its retained earnings at $ of capital due to the number of highly profitable projects available to the firm and its limited earnings. The company is considering the following seven investment projects:
Project Size IRR
A $
B
C
D
E
F
G
Assume that each of these projects is independent and that each is just as risky as the firm's existing assets. Which set of projects should be accepted?
Project A
accept
Project B
accept
Project C
accept
Project D
don't accept
Project E
don't accept
Project F
don't accept
Project G
accept
What is the firm's optimal capital budget? Round your answer to the nearest dollar.
$
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
