2a. (WACC) Margo Corporation is a major producer of lawn care products. Its stock currently sells for $19 per share; there are 10.5 million shares outstanding. It has debt

with a book value of$400 million. Margo bonds yield 7% and trade at 100% of face value. Bonds mature in 10 years. The risk-free rate is 8%, the market risk premium

is 9% and Margo has a beta equal to 0.9. The tax rate is 37%.The WACC is

%.

2b.Given the following cash flows for projects A and B. A: ($-2000, $400, $700, $800, $300),

B: ($-2000, $600, $300, $900, $300). If the required rate of return for the project is 8.9%. The NPV of project A is $