Fan Fan Inc. is evaluating an overseas expansion that will cost $1 million and is expected to generate the following cash flows: year 1: -$250,000; year 2: +$450,000; year 3: +$550,000; and year 4: +$800,000. What is the payback period? The cash flows for two projects, A and B, are shown in the table, below. Notice that Project A has a life of 3 years and Project B has a 2 year life. Use the replacement chain approach to calculate the NPV of each project over a common life-span. What is the NPV of the Project A chain minus the NPV of the Project B chain? Cost of capital is 8% Project CFs Time A B 0 -150 -104 1 66 66 2 66 66 3 66 Vandalay Corp. is a Canadian apparel company. The company currently has 5 million common shares trading at $17 each, and bonds with a total face value of $100 million. The bonds have a maturity of 30 years and pay semiannual coupons at 5.5%. They are currently trading at 90% of par. The market beta of the company is 2.10, T-bills are currently yielding 4%, and average return on market index is 7%. Vandalay's tax rate is 30%. The company BEFORE tax cost of debt is The company cost of equity is The weight of equity is The company cost of capital is A/ A A/