PART A.

Waxo coastloands company is considering the purchase of land and the construction of a new plant. the land, which would be bought immediately (at t=0), has a cost of $100,000 and the building, which would be erected at the end of the first year (t=1) , would cost $200,000. From year 2 through 5, it is estimated that the firm's cash flow will be $125,000 each year. what is the projects discounted payback period if it requires a 14% return on the project?

A. 3.42 years

B. 3.80 years

C. 4.15 years

D. 4.32 years

PART B.

Waxk is also considering a project that has initial investment of $1,920. it produces cash inflow of $450 at the end of the first year. this cash flow grows at 12% for years 2 through 5. what is the projects NPV if the company is expecting its WACC to be 10%?

A. $220.45

B. $113.45

C. Answer is meaningless since WACC is less than the growth rate of cash flows.

D. $183.93

E. $201.20