Question 14: Practice

Please show work,no excel!

Thank you :)

14. [Extra +1] The managers of JJ's Enterprises are trying to determine the company's optimal capital budget for the upcoming year. JJ's is considering the following projects: The company estimates that its WACC is 11 percent. All projects are independent. The company adjusts for risk by adding 2 percentage points to the WACC for high-risk projects and subtracting 2 percentage points from the WACC for low-risk projects. Which of the projects will the company accept? Size $200, 000 500,000 400, 000 300, 000 100,000 200,000 400,000 Rate of Return 168 14 12 Risk High Average Pro Low High Average 10 10 (A) A, B, C,F