Find the payback in years to the nearest tenths place for


1. Find the payback in years (to the nearest tenths place) for the following cash flow with a WACC of 4%:

Time Period                Cash Flow                   Cumulative Out of Pocket

       0                                -100                                         -100

       1                                   40                                           -60

       2                                   50                                           -10

       3                                   20                                          +10

       4                                   70                                          +80

2. Suppose the risk free rate is 5% and that the market risk premium is 7%. What is the required return on the (1) the market, (2) a stock with a beta of 1.0, (3) a stock with a beta of 1.7?

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Financial Management: Find the payback in years to the nearest tenths place for
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