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

YearRestaurant ARestaurant B

0(7,500,000)(9,000,000)

11,600,000 1,700,000

21,800,0002,000,000

32,000,000 2,200,000

42,200,0002,000,000

51,800,000 1,800,000

61,600,0001,600,000

71,400,000 1,400,000

81,300,0001,200,000

91,200,0001,000,000

101,000,0001,000,000

1.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).

PaybackPayback

Restaurant A = Restaurant B = Acquire?

2.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%).

WACC =