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Alignment 4 Gear . Number Filter Styles Cells B G 51 Question 8a Two projects, Alpha and Beta, are being considered using the payback method. Each has an initial cost of $100,000. 52 The annual cash flows for each project are listed below. 53 a) What is the pay back period in years for Alpha? (round to two decimal places) Year Project Alpha Project Beta 54 Question 8b b) What is the pay back period in years for Beta? (round to two decimal places) 1 25,000 15,000 55 N 25,000 25,000 56 3.50 3 25,000 45,000 57 3 points 4 25,000 30,000 58 5 25,000 20,000 59 6 25,000 15,000 60 61 Question 9a ACME Corp. is considering a new capital project that costs $1,200,000 up front, but after that will generate net cash 62 inflows each year (in perpetuity) of $140,000. The firm's cost of capital is 11%. 63 $72,727 a) What is the project's Net Present Value (NPV)? 64 Question 9b b) What is the project's Economic Value Added (EVA)? 65 (The formula for EVA is on page 444 of the textbook.) 66 $8,000 67 4 points 68 69 Question 10 A fitness equipment manufacturer is capitalized with long-term debt, preferred stock and common stock. The amount 70 and cost of each capital source is in the table below. The cost of debt is the after-tax cost. 71 7.16% What is the firm's weighted average cost of capital? (round to two decimal places) Amount ($) Cost (%) 72 3 points Long-term debt 800,000 4% 73 Preferred stock 350,000 5% 74 Common stock 3,900,000 8% 75 Total 5,050,000 OSE Directions Questions to Complete 10:56 PM 0 0 0 9 12/1/2020