2

23. For the following situation, what is the payback (in years)? Initial cost: $1.5 million Cash flows: Year 1 $300,000, Year 2 $400,000, Year 3 $500,000. Year 4 $400,000, Year 5 $300,000 24. What is the net present value (NPV) for the following situation? Should this capital project be accepted? Explain your answer. Initial cost: $78,000 Cost of capital: 8 percent Cash flows: Year 1 $28,000, Year 2 $37,000, Year 3 $34,000 25. A company is considering a one-year investment that costs $100,000. The investment would earn $15,000 during that year. What is the in- magazir CREA the pla projec CON or re Mak in re TH sta The gani will Cash flows: Year 1 $28,000, Year 2 $37,000, Year 3 $ 34,000 25. A company is considering a one-year investment that costs $100.000 The investment would earn $15,000 during that year. What is the in ternal rate of return on this investment? 26. In the following situation, calculate the weighted average cost of capi. tal (WACC). Proportion of debt: 40 percent Cost of debt: 6 percent Proportion of equity: 60 percent Cost of equity: 9 percent be