Vang Enterprises, which is debt-free and finances only with equity from retained earnings, is considering 7 equal-sized capital budgeting projects. Its CFO hired you to assist in deciding whether none, some, or all of the projects should be accepted. You have the following information: rRF= 4.50%; RPM = 5.50%; and b = 0.93. The company adds or subtracts a specified percentage to the corporate WACC when it evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below. If these are the only projects under consideration, how large should the capital budget be? Project Risk Risk Factor Expected Return Cost (Millions)
1 Very low -2.00% 7.60% $25.00
2 Low -1.00% 9.15% $25.00
3 Average 0.00% 10.10% $25.00
4 High 1.00% 10.40% $25.00
5 Very high 2.00% 10.80% $25.00
6 Very high 2.00% 10.90% $25.00
7 Very high 2.00% 13.00% $25.00

a. $ 125
b. $ 100
c. $ 25
d. $50
e. $75

E $75

Explanation:

Using CAMP we solve for the Cost of equity on each and determinate which project are worht to invest on it

A

risk free =0.045

rate premium market = (market rate - risk free) =  0.055

beta(non diversifiable risk) =0.93

Ke0.09615 = 9.615%

A 9.615% - 2.00% =  7.615% As the return is 7.60% we should reject

B 9.615% - 1% = 8.615% return of 9.15% we should Accept

C return of 10.10% while Ke 9.615% Accepted

D 9.615% + 1% = 10.615% return of 10.40% rejected

E 9.615% + 2% = 11.615% against 10.80% yield rejected

F cost of 11.615% ith return of 10.90% rejected

G cost of 11.615% with return of 13.00% Accepted

We accept three projectthus, we require $75

the first successful, urban blues recording, selling more than 75,000 copies, was made in year 1920.

mamie smith recorded the first commercially successful example of the urban blues,   with the recording of “crazy blues”."crazy blues" was recorded on august 10, 1920, in new york city. within a month of the release of “crazy blues” it had sold 75,000 copies.