1) CFO of Mega Munchies of late received report that contained given information:
Project Cost IRR
E $200,000 19%
F $300,000 17%
G $200,000 14%
Capital Structure
Type of Capital Proportion
Debt 40%
Preferred Stock 0
Common Equity 60%
Weighted average cost of capital (WACC) is= 12% if firm doesn’t have to issue new common equity; if new common equity is required, WACC is= 15%. If Mega Munchies expects to make $240,000 in retained earnings this year, which project(s) must be purchased? Explain why? Suppose the projects are independent.