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Rob wants to decide between building Restaurant A or Restaurant B. The following are projected cash flows for the restaurants. Year Restaurant A Restaurant B

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Rob wants to decide between building Restaurant A or Restaurant B. The following are projected cash flows for the restaurants. Year Restaurant A Restaurant B (7,500,000) (9,000,000) - O 1,600,000 1,700,000 1,800,000 2,000,000 2,000,000 2,200,000 2,200,000 2,000,000 1,800,000 1,800,000 1,600,000 1,600,000 1,400,000 1,400,000 1,300,000 1,200,000 1,200,000 1,000,000 10 1,000,000 1,000,000 5. What is the payback period for Restaurant A and Restaurant B? If Rob requires a payback period of 5 years, which restaurant(s) should he acquire? Round answer to hundredths place (for example: 12.34). Payback Payback Restaurant A = Restaurant B = Acquire? 6. Calculate the WACC for Rob's Restaurants. Assume 10% cost of debt, 13% required return on preferred stocks, and 16% required return on common stocks. Also assume 40% taxes. Round answer to the hundredths place (for example: 12.34%)

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