Version A

FIN $350,24$ S

$14.$ Which of the projects will the company accept?

$\backslash$table$[[,,,,,\backslash$table$[[($a$)$ No$],[$budget$],[$limitation$]],($b$)$ subject to budget,$],[$Project$,\backslash$table$[[$Required$],[$investment$],[($in$]],\backslash$table$[[$Rate of$],[$Return$]],\backslash$table$[[$Risk$-$adjusted$],[$WACC$]],$Excess Return,Ranking,Available Capital,Ranking$],[,$millions$),,,,,$M$,$A$],[$A$,$$$200,16\mathrm{.}0\%,,,$L$.,,],[$B$,500,13\mathrm{.}5,,,,,],[C,400,12\mathrm{.}5,,,,,3],[D,1000,11\mathrm{.}5,,,,$N$,],[$E$,600,10\mathrm{.}7,,,,,],[F,200,10\mathrm{.}0,,,,,],[G,400,9\mathrm{.}5,$s:$,,,kI,]]$

Except for projects A and $B$ are mutually exclusive, all the other projects are independent.

Projects A and $C$ are high$-$risk projects; projects $B$ and $F$ are average$-$risk projects; while projects $D,E,$ and $G$ are low$-$risk projects.

The company estimates that its WACC is $11\%.$ 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.

The company has a limited capital budget of $$1600.$

A$)A,D,G$

B$)A,D$

C$)B,C,F$

D$)A,B,E,F$

E$)A,C,E,F$