1a.

Consider the two projects below. What is the crossover point for the two projects?

Period	Project 1 CF	Project 2 CF
0	-500	-400
1	100	250
2	150	200
3	200	150
4	250	100
5	300	50

1b.

Calculate the WACC for a firm with the following characteristics:

Shares Outstanding: 1.5 million

Share Price: $13.76

Face Value of Debt: $9.9 million

YTM on Debt: 5.9%

Coupon Payments: $25 every six months

Time to Maturity on Debt: 11 years

Beta = 1.25

Risk-Free Rate=2.5%

Expected Return on Market = 9.9%

Tax Rate=33%