1) A project has an initial cost of $200,000. Further, it is expected to bring in the following cash flows: $45,000 in year 1; $50,000 in year 2; $75,000 in year 3; $40,000 in year 4. Assume that WACC is 12% and the beta for the company's stock is 1.2, and the firm wants to recover its initial investment in 3.50 years (or less). Based on relevant information, answer the questions below.

a) (15 Points) What is the payback period? Write out your equation(s) clearly and show your input(s).

b) (5 Points) Would the firm accept the project based on the payback period?

Clearly label your findings (e.g., xyz ratio = ..) and designate which part of the question you are answering (if there are multiple parts). Write out your equations clearly. Show your work by typing it in Canvas. Answers (whether correct or incorrect) without work shown will receive zero points. Simply typing your work will suffice. (e.g., x = y + 2z). No need to use mathematical functions in Canvas.

In each part of the question (when there is a calculation): Leave four decimal places in intermediate steps. Leave four decimal places for the final answer (only two decimal places if it is a dollar amount).

2) Thurman Corporation is a fast-growing healthcare company. Its expected cash flows, FCFs, (in millions) for the next three years are: -$200, $800, and $1,100, respectively. Thurman expects competition and market saturation to reduce its growth rate after Year 3 to 6% for all years in the foreseeable future. Assume that the WACC for the company is 14%, the beta for the stock is 2.3, and the yield to maturity is 8%. Using the relevant information,

a) (8 Points) Determine the horizon (terminal) value. Write out your equation(s) clearly and show your input(s).

b) (12 Points) Determine the value of the operations today. Write out your equation(s) clearly and show your input(s).

Clearly label your findings (e.g., xyz ratio = ..) and designate which part of the question you are answering (if there are multiple parts). Write out your equations clearly. Show your work by typing it in Canvas. Answers (whether correct or incorrect) without work shown will receive zero points. Simply typing your work will suffice. (e.g., x = y + 2z). No need to use mathematical functions in Canvas.

In each part of the question (when there is a calculation): Leave four decimal places in intermediate steps. Leave four decimal places for the final answer (only two decimal places if it is a dollar amount).