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Marble Construction estimates that its WACC is 8% if equity comes from retained earnings. However, if...

Marble Construction estimates that its WACC is 8% if equity comes from retained earnings. However, if the company issues new stock to raise new equity, it estimates that its WACC will rise to 8.8%. The company believes that it will exhaust its retained earnings at $2,400,000 of capital due to the number of highly profitable projects available to the firm and its limited earnings. The company is considering the following seven investment projects:

Project Size IRR
A $    650,000 13.9 %
B 1,000,000 13.6
C 990,000 8.3
D 1,200,000 9.1
E 530,000 8.6
F 650,000 9.5
G 730,000 8.0

Assume that each of these projects is independent and that each is just as risky as the firm's existing assets. Which set of projects 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? Round your answer to the nearest dollar.

$  

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