Managers from different departments in Bensen Systems, a large multinational corporation, have offered seven projects for consideration by the corporate office. A staff member for the chief financial...

Managers from different departments in Bensen

Systems, a large multinational corporation, have offered

seven projects for consideration by the corporate

office. A staff member for the chief financial

officer used key words to identify the projects and

then listed them in order of projected rate of return

as shown below. If the company wants to grow rapidly

through high leverage and uses only 5% equity

financing that has a cost of equity capital of 10% and

95% debt financing with a cost of debt capital of

19%, which projects should the company undertake?

Project ID Projected ROR, % per year

Inventory 30.0

Technology 28.4

Warehouse 21.9

Maintenance 19.5

Products 13.1

Energy 9.6

Shipping 8.2