OPTIMAL CAPITAL BUDGET Marble Construction estimates that its WACC is 10% if equity comes from retained earnings....

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OPTIMAL CAPITAL BUDGET
Marble Construction estimates that its WACC is 10% if equitycomes from retained earnings. However, if the company issues newstock to raise new equity, it estimates that its WACC will rise to10.8%. The company believes that it will exhaust its retainedearnings at $2,500,000 of capital due to the number of highlyprofitable projects available to the firm and its limited earnings.The company is considering the following seven investmentprojects:
Project Size IRR
A $650,000 14.0%
B 1,050,000 13.5
C 1,000,000 11.2
D 1,200,000 11.0
E 500,000 10.7
F 650,000 10.3
G 700,000 10.2
Assume that each of these projects is independent and that eachis just as risky as the firm's existing assets. Which set ofprojects should be accepted?
Project A -Select-AcceptDon't acceptItem 1
Project B -Select-AcceptDon't acceptItem 2
Project C -Select-AcceptDon't acceptItem 3
Project D -Select-AcceptDon't acceptItem 4
Project E -Select-AcceptDon't acceptItem 5
Project F -Select-AcceptDon't acceptItem 6
Project G -Select-AcceptDon't acceptItem 7
What is the firm's optimal capital budget? Write out your answercompletely. For example, 13 million should be entered as13,000,000.
$

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OPTIMAL CAPITAL BUDGETMarble Construction estimates that its WACC is 10% if equitycomes from retained earnings. However, if the company issues newstock to raise new equity, it estimates that its WACC will rise to10.8%. The company believes that it will exhaust its retainedearnings at $2,500,000 of capital due to the number of highlyprofitable projects available to the firm and its limited earnings.The company is considering the following seven investmentprojects:ProjectSizeIRRA$650,00014.0%B1,050,00013.5C1,000,00011.2D1,200,00011.0E500,00010.7F650,00010.3G700,00010.2Assume that each of these projects is independent and that eachis just as risky as the firm's existing assets. Which set ofprojects should be accepted?Project A-Select-AcceptDon't acceptItem 1Project B-Select-AcceptDon't acceptItem 2Project C-Select-AcceptDon't acceptItem 3Project D-Select-AcceptDon't acceptItem 4Project E-Select-AcceptDon't acceptItem 5Project F-Select-AcceptDon't acceptItem 6Project G-Select-AcceptDon't acceptItem 7What is the firm's optimal capital budget? Write out your answercompletely. For example, 13 million should be entered as13,000,000.$

Project	Size	IRR

A	$650,000	14.0%
B	1,050,000	13.5
C	1,000,000	11.2
D	1,200,000	11.0
E	500,000	10.7
F	650,000	10.3
G	700,000	10.2

Project A	-Select-AcceptDon't acceptItem 1
Project B	-Select-AcceptDon't acceptItem 2
Project C	-Select-AcceptDon't acceptItem 3
Project D	-Select-AcceptDon't acceptItem 4
Project E	-Select-AcceptDon't acceptItem 5
Project F	-Select-AcceptDon't acceptItem 6
Project G	-Select-AcceptDon't acceptItem 7