(5) Find the paybacks for Projects L and S. Payback Calculations Project L Years 0 1 2 3 | | | | Cash Flow -100 10 60 80 Cumulative Cash Flow -100 -90 -30 50 Payback L = Project S Years 0 1 2 3 | | | | Cash Flow -100 70 50 20 Cumulative Cash Flow -100 -30 20 40 Payback S = As a separate project (Project P), the firm is considering sponsoring a pavilion at the upcoming World's Fair. The pavilion's initial outlay at t = 0 is $800,000, and it is expected to result in $5 million of incremental cash inflows during its one year of operation. However, it would then take another year, and a $5 million cash outflow to demolish the site and return it to its original condition. Thus, Project P's expected cash flows (in millions of dollars) look like this: Year Cash Flow 0 ($0.8) 1 $5.0 WACC = 10% 2 ($5.0) The project is estimated to be of average risk, so its WACC is 10%.