The cash flows, payback periods, and NPVs for Projects A through F are given in Table 3. For all of the projects, the required rate of return is 10 percent.

Project A

Project B

Project C

Project D

Project E

Project F

-1,000

-1,000

-1,000

-1,000

-1,000

-1,000

1

1,000

100

400

500

400

500

2

200

300

500

400

500

3

300

200

500

400

10,000

4

400

100

400

5

500

500

400

Payback period

1.0

4.0

4.0

2.0

2.5

2.0

NPV

-90.91

65.26

140.60

243.43

516.31

7,380.92

Comment on why the payback period provides misleading information about the following:

a. Project A

(3 marks)

b. Project B versus Project C

(3 marks)

c. Project D versus Project E

(4 marks) An analyst assembles the following facts concerning a company's component costs of capital and capital structure. Based on the information given, calculate the company's WACC. (6 marks