Instructions: Read and analyze the situations given below. Answer the following questions on a separate sheet of paper. Show your computations. (20 items x 5 points) Phantom Troupe, Inc. plans to put up a small game lounge. The overall cost of the project is P175,000 which is expected to exist in seven (7) years. Periods Present value factors 12% 14% 16% 18% 20% 22% 24% 7 4.564 4.288 4.039 3.812 3.605 3.416 3.242 Case A: Annual cash inflows for seven (7) years is P50,000 (WACC is 12%) 1. What is the payback period? 2. If the management accepts projects with payback period of four (4) years, will the game lounge be accepted? Why or why not? 3. What is the accounting rate of return? 4. What is the discounted payback period? 5. If the acceptable discounted payback period is four (4) years, will it be accepted? Why or why not? 6. What is the net present value? 7. If net present value was used to evaluate the project, will it be accepted? Why or why not? 8. What is the profitability index? 9. What is the internal rate of return? Case B: Uneven annual cash flows (WACC is 12%) Year Annual cash inflows 1-2 P40,000 3-4 50,000 5-6 60,000 7 50,000 10. What is the payback period? 11. If the management accepts projects with payback period of four (4) years, will the game lounge be accepted? Why or why not? 12. What is the accounting rate of return? 13. What is the discounted payback period? 14. If the management accepts projects with payback period of four (4) years, will the game lounge be accepted? Why or why not? 15. What is the net present value? 16. If net present value was used to evaluate the project, will it be accepted? Why or why not? 17. What is the profitability index? 18. Considering the profitability index, should the project be accepted? Why or why not? ABC Corporation made available the following data for computing the firm's cost of capital Par value Total Par Market Flotation Expected Amount price per costs Growth share Rate 10%, Bonds Payable P1,000 P60,000,000 P1,250 5% 15%. Preference shares 100 10,000,000 250 5% Ordinary shares 30,000,000 40 7% 8% Retained earnings 10,000,000 8% Ordinary shares outstanding is 800,000; Profit before interest and taxes - P20,000,000; Current dividend per ordinary share - P3.00; Tax rate - 30% 19. What is the total market value of all the funds? 20. What is the weighted average cost of capital