1- What is the payback in yearsif investment cost is $40000 and the after-tax benefit is $5800? (Do not round intermediate calculations, round final answer to two decimals, i,e. 123.45)

2- Bill Preneur buys a piece of equipment for $361,000. He puts down $62,000 and finances the balance. Bill's opportunity cost is 4.4 percent and the lender's interest rate is 8.9 percent. Find the weighted average cost of capital (WACC). (Do not round intermediate calculations, round final answer to two decimals, i.e. 123.45)

3- Kenneth Padilla is considering investing in a franchise that will require an initial outlay of $76,000. He conducted market research and found that after-tax cash flows on the investment should be about $22,000 per year for the next 7 years. The franchiser stated that Kenneth would generate a 19.8 percent return. Her cost of capital is 10.7 percent. Find the Net Present Value (NPV) for the project: (Do not round intermediate calculations, round final answer to two decimals, negative should be preceded by - i.e. -123.45)

4- Based on the NPV results you obtained in the previous question,is the franchise a good investment?Why or why not? Explain fully.

5- Mary Bighairis considering investing in a beautysalonthat will cost her $17,000. The after-tax cash flows on the investment should be about $4,000 per year for the next 6 years. Her opportunity cost of capital is 11.9 percent. Find the Profitability Index (PI) of buying the beauty salon: (Do not round intermediate calculations; round final answer to four decimals, i.e. 123.4567)

6- Based on the Profitability Index (PI)results you obtained in the previous question,is the beauty salona good investment?Why or why not? Explain fully.

7- Joe Pie is considering investing in a Heaven Piza franchise that will require an initial outlay of $100,000. He conducted market research and found that after-tax cash flows on this investment should be about $20,000 a year for the next 7 years.The franchiser stated that Herb will generate a 20 percent rate of return.He currently has his money in a mutual fund which has grown at an average annual rate of 10 percent. He tells the franchiser that money has a time value and the actual rate of return according to his calculations is much less than 20 percent.

a) Do you agree with the franchiser or with Joe?

b) What rate of return is the franchiser using and what method did Heaven Pizza use to calculate it?

c) What rate of return is Joe using and what method did he use?

d) Should Joe make the investment?Explain your answer.